Workplace Pensions: Auto-Enrolment Duties for Employers
For UK employers: the moment your first employee starts, you have workplace pension duties, even if that employee is part time and even if you are a two-person business. This guide explains who you must enrol, what you must pay, the deadline for telling The Pensions Regulator, and the ongoing tasks that catch small employers out.
Key takeaways
- Your duties start on the day your first employee starts work. There is no small-business exemption.
- You must enrol workers aged 22 to State Pension age who earn over £10,000 a year, and let other workers opt in.
- The minimum total contribution is 8% of qualifying earnings, and you as employer must pay at least 3% of that.
- Complete your declaration of compliance with The Pensions Regulator within 5 months of your duties start date.
- Every 3 years you must re-enrol eligible staff who opted out, and you must never encourage anyone to opt out.
Auto-enrolment turned workplace pensions from an optional perk into a legal duty. Every UK employer, whatever its size, has to put eligible staff into a qualifying pension scheme, pay contributions and keep records. For a first-time employer this sits alongside payroll, right to work checks and employers' liability insurance, and it is easy to treat it as an afterthought. That is a mistake, because the duties start immediately and the regulator does check.
This guide covers the full cycle: working out who counts, choosing a scheme, enrolling people, paying contributions, handling opt-outs, declaring compliance and re-enrolling every three years. It is general information, not legal or financial advice. Thresholds and rules are reviewed regularly, so check the current figures on GOV.UK and The Pensions Regulator's website, or ask a qualified adviser before you act.
When your duties start
Your duties start on your duties start date, which is the day your first member of staff begins working for you. It does not matter whether they work two hours a week or forty, or whether they will be eligible for enrolment. From that date you must assess your staff, and The Pensions Regulator expects you to know your obligations.
Directors can be a special case. If your company has only directors and no other employees, the rules may not apply in the same way, and a director with an employment contract may be treated differently from one without. If that is your situation, check The Pensions Regulator's guidance for director-only companies before assuming you have no duties.
Who you must enrol, and who can ask to join
Each time you pay staff, you assess them based on their age and what they earn in that pay period. The assessment puts each person into one of a few groups, and each group has different rights.
Eligible jobholders: enrol automatically
Workers aged at least 22 and under State Pension age who earn more than £10,000 a year (or the equivalent for the pay period) must be put into a qualifying pension scheme automatically. You must pay employer contributions for them. They do not need to ask; enrolment is the default.
Others: let them opt in or join
Workers who are outside that age range, or who earn less, are not enrolled automatically, but they still have rights. Depending on their earnings, they may be able to ask to join your scheme, and in some cases you must then pay employer contributions for them too. The earnings levels that decide which group someone falls into are set by the government and can change, so let your payroll software do the assessment and check The Pensions Regulator's current thresholds.
Why the assessment repeats every pay period
Someone who earns less than the trigger in a quiet month may cross it in a busy one, for example when overtime or seasonal hours push their pay up. That is why the assessment runs on every pay run, not just once at hiring. Workers with variable pay are the most common reason small employers miss an enrolment.
Example
Imagine a cafe owner, Priya, with three staff. Tom is 25 and works full time, so he is enrolled from his first payday. Ellie is 19 and works full time, so she is not enrolled automatically because she is under 22, but she can ask to join. Sam is 40 and works a few hours a week on low pay, so he is not enrolled automatically, but in December his extra shifts push one month's pay over the trigger. Priya's payroll software flags him that month, and she must enrol him. These names and situations are made up for illustration.
Contributions: what you and your staff pay
Minimum contributions are worked out on qualifying earnings, which is a band of earnings between a lower and an upper limit. The band is set each year by the government, so do not hard-code it into a spreadsheet; your payroll software should update it. Some schemes calculate contributions on all earnings or basic pay instead, which can be simpler and is allowed if the scheme meets the relevant test.
| Who pays | Minimum share | Notes |
|---|---|---|
| Employer | At least 3% of qualifying earnings | You can pay more, and many employers do to attract staff |
| Employee | The rest of the 8% total | Usually taken through payroll; tax relief applies |
| Total | At least 8% of qualifying earnings | If you pay more than 3%, the employee can pay less, as long as the total reaches 8% |
You must pay contributions to the scheme on time. Schemes set their own payment dates within legal limits, and late payments are reported to the regulator. Treat pension contributions like payroll taxes: money you have deducted from staff is not yours to use for cash flow.
Pro tip
When you budget for a new hire, add your employer pension contribution to the salary along with employer National Insurance. A job advertised at a set salary costs you noticeably more once both are included, and it is better to know that before you make an offer.
Choosing a pension scheme
You must use a scheme that qualifies for auto-enrolment. Most small employers use a master trust or a group personal pension from a provider that accepts employers of any size. When you compare providers, look at:
- Whether they accept you. Some providers only take larger employers. Others, including the government-backed NEST, must accept any employer.
- Charges for members. Charges come out of your staff's pension pots, so lower charges mean more money for them.
- Charges for employers. Some providers charge set-up or ongoing fees to employers; others do not.
- Payroll integration. The best fit is a scheme your payroll software can send data to automatically, so enrolments and contributions flow without retyping.
- Investment choices and member support. A sensible default fund and clear online access help staff engage with their savings.
The Pensions Regulator publishes guidance on choosing a scheme. You are not giving financial advice to staff by choosing one, but you should make a considered choice and keep a note of why.
Step by step: setting up auto-enrolment
- Note your duties start date. It is the day your first employee starts. Put it, and the 5-month declaration deadline, in your calendar.
- Choose a qualifying scheme. Set up the employer account and connect it to your payroll software if possible.
- Assess your staff on every pay run. Your payroll software, whether BrightPay, Sage, Xero, IRIS, QuickBooks or another recognised product, should do this automatically.
- Enrol eligible jobholders. Send their details to the scheme and start deducting and paying contributions.
- Write to your staff. You must tell each member of staff in writing how auto-enrolment applies to them, including those you do not enrol. Providers and payroll software often generate these letters.
- Handle opt-outs and opt-ins. Process requests promptly and refund contributions correctly where someone opts out within the allowed window.
- Complete your declaration of compliance. Do it online with The Pensions Regulator within 5 months of your duties start date.
- Keep records. Keep records of enrolments, opt-outs, opt-ins and contributions, as the regulator can ask to see them.
Common mistake
Thinking that if no one is eligible, there is nothing to do. Even if every member of your staff is too young, too old or earns too little to be enrolled automatically, you still have duties: you must assess them, write to them about their rights and complete your declaration of compliance. A declaration with no one enrolled is still a declaration.
Opt-outs: the rule you must not break
Employees can choose to opt out after they have been enrolled. If they do it within the set opt-out window, they get a refund of their own contributions. That is their decision, and the law protects it in both directions.
What you must not do is encourage or pressure anyone to opt out. That includes hinting that people who stay in will be paid less, offering a higher salary to those who leave the scheme, or asking job applicants whether they plan to opt out. Inducements like these are prohibited, and the regulator can take action.
In practice, keep your tone neutral. If a member of staff asks whether they should opt out, explain that you cannot advise them and point them to the free guidance services listed on GOV.UK, such as MoneyHelper. Never fill in an opt-out form for someone; they must do it themselves through the scheme.
Re-enrolment every three years
Auto-enrolment is not a one-off. Roughly every 3 years, on your re-enrolment date, you must put back into the scheme any eligible jobholders who opted out or stopped contributing more than a set time before. They can opt out again if they wish. You then complete a re-declaration of compliance with The Pensions Regulator, even if no one needed re-enrolling.
The regulator writes to employers about their re-enrolment date, but letters go astray when contact details change. Keep your account details up to date and note the date yourself, alongside your scheme details and declaration reference.
What happens if you get it wrong
The Pensions Regulator checks that employers have declared compliance and that contributions are being paid. If you miss a deadline or fail to enrol people, it will usually contact you first and give you a chance to put things right. If you still do not comply, it can issue notices and penalties. You may also have to pay the missed contributions, including the employer share, to put staff back in the position they should have been in.
The safest approach is simple: set up from day one, let your payroll software handle the assessment, and fix anything unusual quickly. If you discover a past error, contact your scheme and seek advice promptly rather than waiting for the regulator to find it.
Auto-enrolment checklist
- Record your duties start date and the 5-month declaration deadline
- Choose a qualifying pension scheme that works with your payroll software
- Confirm your software assesses staff on every pay run
- Enrol workers aged 22 to State Pension age earning over £10,000 a year
- Budget for at least 3% employer contributions on qualifying earnings
- Send the required letters to every member of staff
- Pay contributions to the scheme on time, every time
- Complete the declaration of compliance with The Pensions Regulator
- Diary your re-enrolment date, 3 years on
- Brief anyone who talks to staff: never encourage opt-outs
Frequently asked questions
Do I need a workplace pension if I only have one part-time employee?
You have duties as soon as that person starts. Whether you must enrol them depends on their age and earnings, but you still need to assess them, tell them about their rights in writing and complete your declaration of compliance with The Pensions Regulator.
Can I pay more than the 3% minimum?
Yes. Many employers pay more as a recruitment and retention benefit. If you pay more, the employee's share can be lower, as long as the total still meets the 8% minimum on qualifying earnings or the equivalent test your scheme uses.
What if an employee asks me whether they should opt out?
Do not advise them either way. Explain that it is their decision and point them to free, impartial guidance such as MoneyHelper. Encouraging an opt-out, even informally, breaks the rules.
Does my payroll software do everything?
Good software assesses staff, calculates contributions and sends data to the scheme. It does not choose your scheme, complete your declaration for you unless you set that up, or remember your re-enrolment date if your details are out of date. You remain responsible.
Related reading
The bottom line
Workplace pension duties begin with your first employee and never really end: assess every pay run, enrol those who qualify, pay at least 3% as employer within an 8% total, declare compliance within 5 months and re-enrol every 3 years. None of it is complicated once your payroll software and pension scheme talk to each other.
Set it up properly from the start, keep a simple record of your key dates, and check The Pensions Regulator and GOV.UK whenever thresholds change. If your situation is unusual, such as a director-only company or staff with very variable pay, a payroll bureau or accountant can confirm your duties before a small slip becomes an expensive one.
