Pension auto-enrolment for employers

Section 01

Who must be auto-enrolled?

• Eligible jobholders (must be auto-enrolled): aged 22–66, earning over £10,000 per year (£833/month or £192/week). You must enrol these workers automatically.
• Non-eligible jobholders (can opt in): aged 16–21 or 67+, or earning between £6,240 and £10,000 per year. They are not auto-enrolled but can opt in, and if they do, you must contribute.
• Entitled workers (can join): earning under £6,240 per year. They can join a pension scheme but you are not required to contribute.
• Directors: a sole director with no other employees is exempt from auto-enrolment. A director who is also an employee (i.e. has a contract of employment) must be assessed like any other worker.

Section 02

Minimum contribution rates

• Employer minimum: 3% of qualifying earnings.
• Employee minimum: 5% of qualifying earnings (including tax relief).
• Total minimum: 8% of qualifying earnings.
• Example: an employee earning £30,000 has qualifying earnings of £23,760 (£30,000 minus £6,240). The employer must contribute at least £712.80 per year (3% of £23,760).
• You can choose to contribute more than the minimum — some employers use enhanced contributions as a benefit to attract staff.
• You can also use a different definition of earnings (e.g. total earnings rather than qualifying earnings) as long as the total contribution meets the minimum.

Section 03

How to set up auto-enrolment

1. 01

   Find out your staging date or duties start date

   If you are a new employer (registered with HMRC after April 2012), your duties start date is the date your first employee starts work. Use The Pensions Regulator's tools at thepensionsregulator.gov.uk to confirm your duties start date.

2. 02

   Assess your workforce

   Identify which workers are eligible jobholders, non-eligible jobholders, and entitled workers. You must do this on your duties start date and then on an ongoing basis as workers' ages and earnings change.

3. 03

   Choose a pension scheme

   You must choose a qualifying pension scheme. NEST (National Employment Savings Trust) is the government-backed default — it accepts all employers and has no minimum size requirement. Other popular providers include The People's Pension, Smart Pension, and Nest. Your payroll software may integrate with specific providers.

4. 04

   Enrol eligible workers

   Enrol eligible workers in your chosen pension scheme within 6 weeks of their start date. Provide them with written information about the scheme, their contributions, and their right to opt out.

5. 05

   Process opt-outs

   Workers can opt out within one month of being enrolled. If they opt out within this window, refund any contributions deducted. Keep records of opt-outs. You must re-enrol opted-out workers every 3 years.

6. 06

   Submit a declaration of compliance

   You must submit a declaration of compliance to The Pensions Regulator within 5 months of your duties start date. This confirms that you have met your auto-enrolment duties. Failure to submit can result in fixed penalties of £400 and escalating daily fines.

Section 04

Ongoing duties

• Re-enrol any workers who opted out every 3 years (re-enrolment date).
• Assess new starters on their first day and enrol eligible workers within 6 weeks.
• Monitor workers' ages and earnings — a worker who turns 22 or whose earnings rise above £10,000 must be assessed.
• Pay contributions to the pension provider by the 22nd of the month following the payroll date.
• Keep records of all auto-enrolment decisions, contributions, and communications for 6 years.
• Submit a re-declaration of compliance to The Pensions Regulator every 3 years.

Section 05

Choosing a pension provider

• NEST: government-backed, accepts all employers, low charges (0.3% annual management charge + 1.8% contribution charge). Free to use. Integrates with most payroll software.
• The People's Pension: popular with small employers, straightforward setup, 0.5% annual management charge. No contribution charge.
• Smart Pension: fully digital, strong payroll integrations, competitive charges for small employers.
• Nest is the safest default for most new employers — it cannot refuse you, and it has no minimum size requirement.