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Auto-enrolment

The government is trying to encourage people to save for retirement.

To help achieve this, employers are required to set up a pension scheme and automatically enrol eligible workers.

Employers and employees contribute into the pension pot based on the employee's qualifying earnings. The current minimum rates are 0.8% for employees and 1% for employers. The government also contributes in the form of tax relief.

Pension schemes have to meet certain conditions in order to comply with auto-enrolment.

Who is eligible?

Workers aged between 22 and their state pension age who earn more than £10,000 a year must be auto-enrolled in a workplace pension.

Other workers who don't meet these criteria may have the option to join a workplace pension scheme.

How are employers affected?

Employers are responsible for making sure they meet their auto-enrolment duties. This includes:

  • identifying eligible workers
  • letting staff know how they will be affected
  • choosing a pension scheme which meets the conditions for auto-enrolment
  • making payments
  • ensuring ongoing compliance such as auto enrolling workers who become eligible
  • completing a re-declaration of compliance every 3 years to The Pensions Regulator.

Starting date

Auto-enrolment begins from your staging date, though there is an option to postpone for up to 3 months. You can find out the date on The Pensions Regulator website using your PAYE reference.

Planning for auto-enrolment

Here are some steps to help you prepare for auto-enrolment:

  • find out your staging date
  • check any existing pension schemes you have
  • check which workers are affected
  • work out how much you need to contribute
  • communicate with your workforce
  • finish your registration requirements 6 months before your staging date
  • put in place a system to auto-enrol employees when they reach the age and income thresholds.

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