What is Auto Enrolment?

Workplace pension law dictates that every employer must now help their employees to save for their retirement. In other words, it is compulsory for employers to enroll their eligible staff into a pension scheme under the Pensions Act; the process of enrolling your employees into a workplace pension scheme is called Auto Enrolment.

Who needs to be Auto enrolled?

Employers will need to look at all workers and decide which individuals meet the criteria for Pensions Auto Enrolment. There are 3 categories of worker:

  • Eligible jobholders must be auto enrolled. (Over 22 years old, work in the UK and earn in excess of £10,000 per year)
  • Non-eligible jobholders can opt into a pension scheme. (Between 16 and 21 years old, work in the UK and earn in excess of £6,136 per year. Alternatively, between 16 and 74 years old, work in the UK and earn in excess of £6,136 but less than £10,000)
  • Entitled workers have the right to join a pension scheme however the employer does not have to contribute. (Aged between 16 and 74, work in the UK and earn below £6,136 per year).

What actions must an employer take?

Employers must assess workers for Auto Enrolment because it is a legal requirement according to the Pensions Act. An employer can however opt to defer Auto Enrolment for new employees for 90 days. After that, employers must enroll Eligible Job Holders into their pension scheme and notify them by letter. Workers can ‘opt out’ of the scheme, however they must do this with the pension scheme provider directly and within 1 month of being enrolled. Employers must also reassess their workforce each pay period. Eligible Job Holders who have ‘opted out’ must be re-enrolled every 3 years.

What is the minimum employer contribution towards an employee’s pension scheme?

In accordance with The Department of Work and Pensions guidelines, the employer contribution has increased as of 6th April 2019. The minimum employer contribution was 2% and has now risen to 3%. Staff contributions to their pension scheme have also increased from 3% to 5% of their monthly salary.

Employee Contributions are entitled to tax relief either at source, via salary sacrifice or by the Government depending on the pension scheme rules.

Don’t have a Pension?

There are many Pension Providers in the market and whilst we do not recommend any specific pension provider, we do work with the following providers.

Smart Pension

Nest Pensions

Aviva Pension

Legal & General

The Peoples Pension

Now Pensions

Standard Life

Contact Us