Auto-enrolment at a glance

Auto-enrolment is the name given by the government and unless you are a sole trader, the new pension legislation will require businesses of all sizes to change their current practices regarding pensions.

Auto-enrolment launched on 1 October 2012 operates through various staging dates which affected the largest employers in the UK first. NEST (National Employment Savings Trust) is currently working with over 900,000 members and 3,000 large employers with over the next five years more than 1.2 million employers will enrol up to 11 million workers into a pension scheme, many with limited experiences of pensions.

Only the very largest employers in the UK were affected in the first stages, but that is about to change. 2014 and 2015 see smaller businesses with 50 to 249 employees to start to meet these new legal duties.

Businesses with less than 30 eligible employees won’t be included until around 2017.

Pension contributions

At first, an employee will only see a minimum of 0.8% of their earnings going to their workplace pension. Their employer will be obliged to add a contribution that is the equivalent of 1% of the worker’s earnings. Tax relief adds another 0.2%.

However, these amounts will increase to a minimum of a 4% contribution from the employee, 3% from the employer, and 1% in tax relief from October 2018.


Businesses who do not set up the auto-enrolment pension correctly and on time may incur severe penalties, ranging from fixed amount of £400 for failing to comply with the statutory notices, to daily rate of £50 to £10,000 depending on the number of staff you have.

Take action

Employers with less experience of pensions need to give themselves plenty of time to get it right, and there’s likely to be more involved than you think. For example, you’ll have to assess your workers to see who’s eligible and make sure your payroll systems are ready for the changes – so it’s not just about putting a pension in place. Whilst it may not take smaller businesses 16 months to implement the changes, you should allow between six and 12 months in your plans.

Relieve your stress and worry by start planning now!

As a small business owner, should I be worried about ‘auto-enrolment’?
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