Since the Pensions Act 2008 came into force, every UK employer has a legal duty to automatically enrol eligible workers into a qualifying workplace pension scheme. Pension auto-enrolment is policed by The Pensions Regulator (TPR), and non-compliance penalties start at £400 fixed and escalate to £10,000 a day for large employers. This guide covers the categories of worker, the contribution minimums, and the declarations TPR expects.
Auto-enrolment sits at the centre of your pensions and insurance duties as an employer. If you are new to the topic, our guide to what a workplace pension is explains the underlying scheme that auto-enrolment populates.
Who must be enrolled
Workers fall into three categories based on age and earnings.
| Category | Age | Earnings test | Action |
|---|---|---|---|
| Eligible jobholder | 22 to State Pension age | Above the earnings trigger | Auto-enrol, employer contributes |
| Non-eligible jobholder | 16-21 or SPA-74 above the trigger, or 16-74 with earnings between the lower qualifying earnings threshold and the trigger | n/a | Can opt in; employer contributes |
| Entitled worker | 16-74, earnings at or below the lower qualifying earnings threshold | n/a | Can opt in; employer not required to contribute |
The earnings test is applied at each pay reference period, not annually. Someone whose pay in one month exceeds the monthly equivalent of the trigger is an eligible jobholder for that month even if their annual pay is far lower.
Minimum contributions
| Source | Minimum % of qualifying earnings |
|---|---|
| Employer | 3% |
| Employee | 5% (4% net + 1% tax relief) |
| Total | 8% |
Qualifying earnings are pay between a lower and an upper threshold. The Department for Work and Pensions reviews the earnings trigger and both thresholds every year, and GOV.UK publishes the current figures. You can use a higher base such as basic pay or total pay; if you do, alternative thresholds apply under the certification rules.
The first-day routine
When a new worker joins:
- Assess them on their first pay date
- Enrol eligible jobholders into the scheme within six weeks
- Issue a statutory letter within six weeks of enrolment
- Allow opt-out within one month for a full refund
- Run the contributions through the next payroll
You may postpone assessment for up to three months from the worker’s start date. This avoids enrolling short-term temps who would leave before the first contribution.
Re-enrolment every three years
Approximately every three years you must:
- Choose a re-enrolment date within a six-month window
- Re-assess all workers who previously opted out
- Re-enrol those who are again eligible jobholders
- Submit a Re-declaration of Compliance to TPR within five months
Failure to re-declare results in fixed penalties even if you have no eligible workers. The cyclical re-enrolment process has its own rules and a separate filing deadline, so it is worth reading our dedicated guide to pension auto re-enrolment before your three-year date falls due.
Choosing a scheme
Most small employers use one of the master trusts:
- NEST (the government-backed default)
- The People’s Pension
- Smart Pension
- Aviva Workplace Pension
- Now: Pensions
Compare on contribution methods (relief at source vs net pay), default investment fund performance, employer charges and integration with your payroll. See our existing auto-enrolment pension page for the underlying mechanics.
Penalties for non-compliance
| Trigger | Penalty |
|---|---|
| Failure to comply notice ignored | £400 fixed |
| Daily escalating penalty (1-4 employees) | £50/day |
| Daily escalating penalty (5-49 employees) | £500/day |
| Daily escalating penalty (50-249 employees) | £2,500/day |
| Daily escalating penalty (250+ employees) | £10,000/day |
| Wilful non-compliance | Criminal prosecution |
Final reminders
Auto-enrolment is run from payroll software and the pension provider’s portal; Nexbal records the contributions in the ledger. For hands-on help, ask for accounting help.