Employment contracts and pay

Workplace pensions: your auto-enrolment duties

Your legal duties to automatically enrol eligible employees into a workplace pension scheme and contribute to their pension. Covers eligibility criteria, contribution rates, employer duties, opt-out rights, re-enrolment requirements, and The Pensions Regulator enforcement.

UK-wide
Guide summary

You must automatically put eligible staff into a workplace pension and pay into it. Check if they are aged 22 to 66 and earn over £10,000 a year. You must pay at least 3% of their qualifying earnings.

  • Auto-enrol staff aged 22 to 66 earning £10,000+
  • You must pay at least 3% into their pension
  • Total minimum contribution is 8%
  • Assess staff when they start and each payday
  • Choose a qualifying pension scheme
  • Write to staff within 6 weeks of enrolling them
  • Complete your declaration of compliance
  • Re-enrol eligible staff every 3 years
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UK-wide

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Your employer duties start on day 1

From the moment you employ your first member of staff, you become responsible for workplace pension duties. This is called automatic enrolment (or auto-enrolment), and it is a legal requirement for all UK employers.

Auto-enrolment means you must automatically enrol eligible workers into a workplace pension scheme and contribute to their pension. These duties apply regardless of your business size, sector, or whether you employ one person or hundreds.

WARNING

Duties start day 1 of your first employee

There are no exceptions to workplace pension duties. As soon as you employ someone for the first time, you must assess whether they are eligible for auto-enrolment. This applies even if you only employ one person part-time.

You cannot wait until your business grows or delay because you are 'too small'. The Pensions Regulator enforces these duties from day 1, with fixed penalties starting at £400 for non-compliance.

Who must be automatically enrolled

Not every employee will need to be auto-enrolled into your pension scheme. Eligibility depends on three criteria: age, earnings, and work location. If all three conditions are met, you must auto-enrol them.

Age range explained: The lower age limit is 22 years old. The upper limit is State Pension age, which is currently 66 but rising to 67 from 6 May 2026.

Earnings assessment: Check every pay period whether employees cross the £10,000 threshold. If someone's earnings fluctuate (for example, seasonal workers or commission-based roles), they may move in and out of eligibility. You must enrol them whenever they meet all three criteria.

Minimum contribution rates

Once you have enrolled an employee, you must pay at least the minimum contribution rates into their pension. The total minimum contribution is 8% of their qualifying earnings, split between employer and employee.

Who pays what: You (the employer) must pay at least 3%, and your employee contributes at least 5%. The employee's 5% includes tax relief, so they effectively pay 4% from their net salary if they are a basic-rate taxpayer.

Can you pay more? Yes. Many employers choose to pay higher contributions (for example, 5% employer, 5% employee) as a staff benefit. The 3%/5% split is the legal minimum.

What are qualifying earnings?

Contributions are calculated based on 'qualifying earnings', not total salary. Qualifying earnings fall within a specific band set by the government each tax year.

Why the band matters: You only pay pension contributions on earnings within the qualifying earnings band. For someone earning £30,000, their qualifying earnings are £30,000 - £6,240 = £23,760. You pay 3% on the £23,760, not the full £30,000.

Example calculation (employee earning £30,000 in 2026/27):

  • Qualifying earnings: £30,000 - £6,240 = £23,760
  • Employer contribution (3%): £23,760 x 3% = £712.80 per year (£59.40/month)
  • Employee contribution (5%): £23,760 x 5% = £1,188 per year (£99/month)

Your eight employer duties

The Pensions Regulator sets out key duties that every employer must follow to comply with auto-enrolment law. These duties cover the entire lifecycle from assessing staff eligibility to ongoing record-keeping.

Duty 1 explained: You must assess every worker to determine if they need to be auto-enrolled. Do this assessment when they start work and at every pay period if earnings fluctuate.

Choosing a pension scheme (Duty 2): Your scheme must be a 'qualifying scheme' - this means it meets minimum requirements set by law. Most workplace pension providers (for example, NEST, The People's Pension, NOW: Pensions) offer qualifying schemes. You can use a master trust, group personal pension, or occupational pension scheme.

Auto-enrolment letters (Duty 3): You must write to eligible workers within prescribed timescales explaining they have been enrolled, the scheme details, contribution amounts, and their right to opt out. Template letters are available from your pension provider or The Pensions Regulator.

Postponement: Delaying enrolment for up to 3 months

Postponement allows you to delay auto-enrolment for up to 3 months. This is useful for businesses with high staff turnover (for example, hospitality, retail) to avoid enrolling temporary staff who leave quickly.

When to use postponement: Postponement is particularly valuable in high-turnover sectors. If many new starters leave within their probation period, postponement saves you administrative work enrolling and unenrolling staff.

Postponement notices: You must give written notice to the employee within prescribed timescales explaining you have postponed their enrolment and when it will happen. You cannot just delay enrolment without notifying them.

Employee opt-out rights

Employees have the legal right to opt out of your pension scheme within one month of being enrolled. If they opt out in time, you must refund all contributions deducted.

After the opt-out window: If an employee leaves the scheme after the one-month opt-out window closes, they are 'ceasing membership' rather than opting out. In this case, contributions stay in the pension - they do not get a refund.

Can you encourage opt-outs? No. It is illegal to induce or coerce workers to opt out (for example, by offering higher pay if they do not join the pension). The Pensions Regulator can issue fines for this.

Re-enrolment every 3 years

Your auto-enrolment duties do not end after initial enrolment. Every 3 years, you must re-assess and re-enrol any eligible workers who previously opted out or left the scheme.

Why re-enrolment matters: Circumstances change. Someone who opted out 3 years ago might now want to save for retirement. Re-enrolment ensures workers get regular opportunities to join the pension.

Tracking your re-enrolment date: Your re-enrolment date is exactly 3 years from your staging date (the date you first became an employer). Set a calendar reminder at least 6 months before your re-enrolment date to prepare.

Penalties for non-compliance

The Pensions Regulator has strong enforcement powers to ensure employers comply with auto-enrolment duties. Penalties escalate quickly if you fail to act.

Register with The Pensions Regulator

Within 5 months of employing your first member of staff, you must complete a declaration of compliance with The Pensions Regulator. This is how you confirm you have set up auto-enrolment correctly.

You will need to provide:

  • Your business details (PAYE reference, company number)
  • Your staging date (date you became an employer)
  • Details of your chosen pension scheme
  • Number of staff you have assessed and enrolled
  • Confirmation you have written to eligible workers

The declaration takes about 20 minutes to complete online. If you miss the 5-month deadline, you may receive a fixed penalty of £400.

Ongoing administration and record-keeping

After initial setup, you have ongoing duties:

  • Assess new starters: Check eligibility for every new employee
  • Monitor earnings: Re-assess existing staff if pay changes (for example, promotions, pay rises)
  • Pay contributions on time: Usually by the 22nd of the month following deduction (19th if paying by cheque)
  • Submit contribution data: Provide contribution schedules to your pension provider
  • Keep records: Maintain records proving you have met your duties (The Pensions Regulator can request these at any time)
  • Process opt-outs: Handle opt-out requests within the 1-month window and refund contributions
  • Re-enrol every 3 years: Track your re-enrolment date and re-enrol eligible staff who previously left