Auto-Enrolment Pension Duties

You must assess each worker and place them in one of three categories. Eligible jobholders — aged 22 to State Pension age, earning over £10,000 per year — must be automatically enrolled without asking. Non-eligible jobholders (younger, older, or earning between £6,240 and £10,000) have the right to opt in if they request it and you must then contribute. Entitled workers (earning below £6,240) may join a scheme but you are not required to contribute.

You must assess workers from their first day. New starters should be assessed immediately — do not wait until the end of the month. Workers on variable hours or pay must be assessed each time they are paid.

Since April 2019 the minimum total contribution is 8% of qualifying earnings, of which at least 3% must be the employer's contribution. Qualifying earnings are the band of earnings between £6,240 and £50,270 per year (2025/26 figures). Some pension schemes calculate contributions on total earnings or a defined salary — check with your provider.

Many employers contribute more than the minimum to attract and retain staff. If a worker wants to contribute more, they can — you are only obliged to match up to the minimum. Workers who opt out stop accruing contributions immediately, and you must refund any contributions already deducted if they opt out within the opt-out window (usually the first month).

You must register your compliance with The Pensions Regulator (TPR) within five months of your staging date or duties start date. Registration is done online via TPR's portal. TPR sends compliance notices and can issue Fixed Penalty Notices (£400) and escalating fines (£50–£10,000 per day) for persistent non-compliance.

Every three years you must re-enrol any workers who previously opted out or ceased membership. Keep records of each worker's category, enrolment date, opt-out notices, and contributions paid — TPR can request these at any time. Many payroll software packages handle auto-enrolment calculations automatically.

Every three years, employers must carry out re-enrolment. On your re-enrolment date (which you choose within a six-month window around the third anniversary of your staging date), you must re-assess all workers and re-enrol anyone who previously opted out, ceased active membership, or reduced their contributions below the minimum. Workers may opt out again after re-enrolment, and the cycle continues every three years indefinitely. You must also submit a new re-declaration of compliance to TPR within five months of your re-enrolment date.

When a worker opts out, the process must be initiated entirely by the worker — employers are legally prohibited from encouraging or inducing opt-outs. The opt-out notice must be submitted to the employer within the opt-out window (typically the first calendar month after enrolment). If it is submitted on time, the worker is treated as never having been enrolled and any contributions deducted must be fully refunded to them, usually in the next payroll run.

Workers who opt out after the opt-out window has closed are treated as having left the pension scheme voluntarily. Their accrued contributions are not refunded. They retain a deferred pension pot with the provider for the period they were a member. Employers must keep opt-out notices for four years and TPR can request evidence of the opt-out process during compliance checks. Deliberately pressuring workers to opt out is a criminal offence carrying fines of up to £50,000.

The Pensions Regulator (TPR) takes a comply or explain approach to auto-enrolment enforcement. Most enforcement action begins with a compliance notice — a formal request to rectify a specific failure within a set time. If not remedied, TPR can issue a Fixed Penalty Notice (£400) or an Escalating Penalty Notice (between £50 and £10,000 per day depending on employer size). Where a breach involved deliberate inducement of workers to opt out, criminal prosecution with fines of up to £50,000 is possible.

For small employers, the most common compliance failures are: failing to enrol workers promptly at the point of starting employment; not assessing variable-hours or zero-hours workers each pay period; missing re-declaration deadlines; and failing to keep opt-out notices for four years. TPR runs proactive compliance campaigns targeting smaller employers and uses HMRC PAYE data to identify businesses that have taken on new staff but not registered for auto-enrolment compliance. Payroll software (including free HMRC-compatible tools) can automate most of the assessment and record-keeping for auto-enrolment, significantly reducing the administrative burden.

Looking ahead, the Pensions Dashboards programme will enable individuals to see all their pension savings in one place online. This has significant implications for employers: pensions data must be accurate and complete for schemes to connect to the dashboards by their required connection date. Employers should work with their pension provider to ensure employee data held by the scheme is up to date, particularly for auto-enrolled workers who have moved jobs, changed names, or have multiple deferred pots across different employers.