auto enrolment

What is Auto Enrolment?

Under the Pensions Act 2008, all employers in the UK must put certain staff into a workplace pension and pay into it, regardless of size. This is called ‘Automatic Enrolment’.

So whether you’re an architect, a shop owner or have a nanny, you are an employer from the day your first member of staff started working for you and you have legal duties.

Current rules state that every employer must automatically enrol and make an employer’s contribution for all staff who:

  • are classed as a ‘worker’
  • are aged between 22 and state pension age
  • earn at least £10,000 per year
  • normally work in the UK (this includes people who are based in the UK but travel abroad for work)

When you enrol a member of staff into your workplace scheme, you must also write to them to tell them:

  • The date you added them to the pension scheme
  • The type of pension scheme and who runs it
  • How much you’ll contribute and how much they’ll have to pay in
  • How to leave the scheme, if they want to
  • How tax relief applies to them.

If staff become eligible because of a change in their age or earnings, you must put them into your pension scheme and write to them within 6 weeks of the day they meet the criteria.

Most workers in the UK have already been automatically enrolled into a workplace pension scheme by their employer. They’ll make contributions to their retirement pot from their pay for as long as they’re employed and eligible.

An employee can choose to opt out of your workplace pension. However, when you consider the potential benefits to their pension pot, why would they opt out?

For example, in a defined contribution pension scheme, each payday they pay in £40. As their employer you put in £30 and they get £10 tax relief from the government (as a basic rate taxpayer). So for £40, a total of £80 goes into their pension towards their retirement savings.

How we can help

Our experts can help you with your Auto Enrolment compliance to:

  1. Assess your workforce
  2. Set up your scheme and communications
  3. Declare your compliance

As well as offering ongoing support with your continuing responsibilities.

Get in touch with a workplace pensions expert

Mercer Marsh Benefits (MMB) is a trading name of Jelf Insurance Brokers Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA). Not all products and services offered are regulated by the FCA (for details see Registered in England and Wales number 0837227. Registered Office: 1 Tower Place West, London, EC3R 5BU.