What Is Auto Enrolment?
Auto enrolment in the UK is a government initiative that requires employers to enrol all eligible employees into a workplace pension scheme.
From 2012 the auto enrolment (AE) pension scheme was designed to help people save for retirement as part of the Pensions Act 2008.
Does auto enrolment apply to all workplaces?
Every employer must follow this initiative, even if they only have one member of eligible staff. It's a statutory requirement for all work-based pension schemes with more than 1 member registered at HM Revenue and Customs (HMRC) to also register with The Pensions Regulator (TPR).
Who does auto enrolment apply to?
Auto-enrolment applies to UK employees 22 years old and over, below state pension age (currently going 66 for men and women - this will gradually increasing from 6 May 2026), and who earn more than £10,000 (from one job).
In every profession or business the employer must have a workplace pension scheme set up, and both the employer and employee must pay into the scheme.
In addition to these people, non-eligible employees have the right to join the scheme if they wish to.
Auto Enrolment Thresholds |
|---|
2024/25
| Annual Earnings | Monthly Earnings | |
| Lower level of qualifying earnings | £6,240 | £520 |
| Earnings for automatic enrolement | £10,000 | £833 |
| Upper level of qualifying earnings | £50,270 | £4,189 |
What are the legal contributions to a workplace pension scheme?
The employee and employer must pay a percentage earnings into the workplace pension scheme.
In most automatic enrolment pension schemes, contributions are based on total earnings between £6,240 and £50,270 a year before tax. Your total earnings include:
salary or wages
bonuses and commission
overtime
statutory sick pay
statutory maternity, paternity or adoption pay
Workplace Pension Contributions |
|---|
From April 2019
| The minimum your employer pays | You pay | Total minimum contribution | |
| From April 2019 | 3% | 5% | 8% |
Who is exempt from auto enrolment?
Company directors without an employment contract are exempt as they are not classed as employees. If a company is made up solely of directors without employment contracts and without any other staff, then the company does not have to set up a workplace pension scheme.
Sole traders are also except from auto enrolment.
When must an employee be auto enrolled?
The employer can enrol its employees when they commence employment, or postpone enrolment for up to 3 months. Employers may decide to postpone enrolment for temporary or short-term employees, or during a probationary period. It is the duty of the employer to inform employees when they will be enrolled into the workplace pension scheme.
Can employees opt out of auto enrolment?
Employees have 1 month from the date of auto enrolment to ‘opt out’. After this date if you choose to opt out you may not be able to get your payments and they will stay in your pension until retirement.
The employer should always inform employees how to opt out of a scheme. An employee can stop or take a break from paying contributions at any time –previous payments will remain, but by taking a break it will reduce the total future pension fund. If an employee opts out of the scheme or takes a break the employer no longer needs to make contributions during that time.
Employers’ responsibility for auto enrolment:
Assessment of workforce for eligibility
Provision of workplace pension
Set up automatic enrolment process
Inform employees of start date and right to opt out
Record keeping of payments.
As part of our portfolio of services Mascolo & Styles can manage auto enrolment on your behalf to comply with the Pensions Act 2008. Being compliant with workplace pensions schemes will avoid enforcement action including compliance notices, and penalty notices.
Call Mascolo & Styles today on 01420 544 444 to discuss we can help you reduce the time you spend on payroll and pensions administration by outsourcing.