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Why does it matter?

The Pensions Act 2008 set out that every employer in the UK must put certain staff into a workplace pension scheme and contribute towards it. This is called ‘automatic enrolment’. If you employ at least one person you are an employer and you have certain legal duties.

The aim of a workplace pension is a way of saving for retirement and that’s arranged by the employer. Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

The Pensions Regulator acknowledges that Auto Enrolment represents a massive cultural change in the UK, with the aim of improving the standard of living of all those in retirement.  This is a long-term ambition in which providing a pension for employees has simply become a part of being an employer in the UK.

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Why does this happen?

When auto enrolment was rolled out across the UK, employers were given a ‘staging date’ based on their number of employees. All employers have now passed their staging date and have declared their compliance with The Pensions Regulator. For new employers, their legal duties begin on the day their first member of staff starts work, known as the ‘duties start date’.


Can employees join even if they are not automatically enrolled?


If an employee is aged between 16 and 75, they are able to join the pension scheme at any time.  As long as they earn a minimum of £6,240 a year (equal to about £520 a month or £120 a week), the employer will have to contribute from the time they join. If an employee earns less than this, the regulations mean that they will not be entitled to contributions from the employer.


Who needs to be automatically enrolled?

As an employer, on your duties start date, you will need to automatically enrol your employees into a pension if they are:

  • Aged at least 22 but are under State Pension Age
  • Earning more than £10,000 a year (£833 a month or £192 a week)
  • Not already an active member of a qualifying workplace pension scheme
  • Working, or usually working, in the UK.

If employees do not meet these criteria on your duties start date, but they do in the future, you will need to automatically enrol them at that point.

Also an employer does not have to automatically enrol an employee if any of the following apply:

  • The employee has already given notice to the employer that they are leaving the job, or the employer has given them notice
  • The employee has evidence of the lifetime allowance protection (for example, a certificate from HMRC)
  • The employee has already taken a pension that meets the automatic enrolment rules and the employer arranged it
  • The employee gets a one-off payment from a workplace pension scheme that’s closed (a ‘winding up lump sum’), and then leaves and re-joins the same job within 12 months of getting the payment
  • The employee is from an EU member state and are in a EU cross-border pension scheme
  • The employee works in a limited liability partnership
  • The employee is a director without an employment contract and they employ at least one other person in the company