We were recently asked by a new employer about auto enrolment and, whilst we have been setting up and managing these schemes for our clients for 10 years now we realised how confusing this is for a new employer. Understanding what is involved, what they need to do, how they choose a scheme, should they choose a private pension scheme for their employees (that we can't advise on!) and how contributions are made.
Apart from giving advice on the scheme, which we can't do as we are not regulated, we can and do set up schemes for employers and manage everything on their behalf as part of our payroll service.
Auto enrolment pensions have been mandatory for employers for the last 10 years (more for larger employers). Currently (2025-26) employers have to contribute 3% and employees have to contribute 5% into a pension scheme which meets auto enrolment requirements. NEST is one such scheme but of course there are many others and employers would need to find one which meets their requirements as well as the auto enrolment standards.
Contributions are required for employees aged 22 and over and earning above £833 monthly. All employees meeting this criteria must be enrolled into a pension scheme within 3 months of them being employed. They can be enrolled from their first day but it is usual to postpone for 3 months as this is the normal probationary period. Younger employees or those earning less than this threshold can choose to join the scheme.
Employees can opt out of contributing to the pension scheme but they mustn't be encouraged to do so. If an employee opts out the employer no longer makes contributions either. The employee must opt out within 6 weeks of being enrolled if they want the deduction from their pay returned to them.
Even if you know your employee will opt out you still need to have a scheme so they can be enrolled before opting out. If your payroll is only for a Director they are exempted from being auto enrolled so you will not need to set up a scheme.
As an employer you have a responsibility to communicate with your employees about auto-enrolment, set up a scheme, enrol eligible employees into it, contribute to it, and submit a re-declaration every 3 years having re-enrolled any employees who have opted out back into the scheme.
As part of our payroll service we will manage all these aspects of auto enrolment for you. So if you are a new employer and need peace of mind knowing you have met your pension auto enrolment duties contact us for a quote for our payroll and auto enrolment service.
You can find out more information from The Pension Regulator website.
