What is auto-enrolment?

Auto-enrolment is one of the significant pension-related obligations that UK employers face, and one that many founders are unaware of until they approach the point at which it applies to them. Understanding what auto-enrolment is and when it kicks in for a business is important groundwork before taking on employees, because the administrative requirements begin at the point employment starts — not at a later date.

Auto-enrolment is a UK government scheme that requires employers to automatically enrol eligible employees into a qualifying workplace pension scheme and make contributions on their behalf. Both the employer and the employee contribute to the pension — the specific rates and thresholds are set by the government and reviewed periodically, so current figures should be confirmed with an accountant or via the Pensions Regulator. Employees can opt out, but must be re-enrolled periodically if they do.

Employers have a staging date from which their auto-enrolment obligations apply — determined by the size and nature of the business. New employers must comply from the point they take on their first eligible employee. Failing to meet auto-enrolment obligations can result in enforcement action from the Pensions Regulator. Our guide to auto-enrolment for UK employers covers the full process and what small businesses need to do to comply.