Auto-enrolment

Also called Workplace pension, Pension auto enrolment

The legal duty to enrol eligible staff into a pension and contribute to it. Automatic, and it starts with the first employee.

What it means

Employers must automatically enrol eligible jobholders — broadly those aged between 22 and State Pension age earning above a threshold — into a qualifying workplace pension, and pay a minimum employer contribution.

Staff can opt out, but they must be enrolled first and cannot be encouraged to leave.

Why it matters

It applies from the moment you employ someone, including a single employee, and it is enforced by The Pensions Regulator with escalating penalties.

It is also a real cost that is routinely missing from hiring budgets, alongside employer's National Insurance.

What it looks like in practice

Assess every employee at each pay period, enrol those eligible, write to all staff explaining their position, and complete a declaration of compliance.

Every three years you must re-enrol eligible staff who opted out, and re-declare.

Most payroll software handles the assessment automatically once configured.

What to watch out for

Directors. A sole director with no employment contract is generally exempt, but two directors with contracts of employment are not — a common and expensive misunderstanding.

Inducing opt-outs. Suggesting to staff that they opt out is unlawful and specifically policed.

Missing the three-yearly re-enrolment, which has no prompt attached to normal payroll.

Where to get proper advice

The Pensions Regulator's website has a step-by-step duties checker. Your payroll provider will usually run the process.