Your guide to auto enrolment pensions

Auto-enrolment ensures employees that are eligible have access to a workplace pension. A workplace pension is a pension scheme created by the employer to help workers save for their future. The company collects pension contributions through the payroll. 

Businesses must ensure they meet the regulations of auto enrolment under the current legislation. 

What is auto enrolment? 

All UK employers must enrol eligible workers into a workplace pension and contribute towards their retirement. It’s called auto enrolment and employees are automatically enrolled in a workplace pension scheme, where eligible. Those employees can opt out of the pension scheme if they don’t want to stay in. 

Who is eligible? 

The workers you must enrol are known as eligible jobholders. 

• Eligible Jobholders: Employees working in the UK, aged between 22 and State Pension age, earning over £10,000 per year. Employers must enrol these individuals and contribute to their pensions. 
• Workers who can ask to join are known as non-eligible jobholders or entitled workers. You must enrol both sets of workers, but are only obliged to make contributions for non-eligible workers, not entitled workers. 
• Non-Eligible Jobholders: Employees aged between 16 and 74 and earn between £6,240 and £10,000 or employees aged between 16 and 21 or between state pension age and 74 and earnings over £10,000 earning. 
• Entitled Workers: Employees earning less than £6,240 and aged between 16 and 74. 
• Temporary and seasonal workers: Employers with staff who work flexible or seasonal hours must assess these workers and enrol them in a workplace pension scheme if they become eligible. As there is no regularity to the amount they earn, the assessment is ongoing and should be carried out each time you pay them. 
• Anyone aged between 22 and state pension age, earning over £192 a week or £833 a month, must be enrolled into a pension scheme. 

Employers duties 

Under the Pension Act 2008, UK employers that employee one or more workers must meet the requirements of the legislation. 

• Set up a workplace pension scheme 
• Automatically enrol eligible employees into a workplace pension 
• Contribute towards employees' pensions meeting minimum contribution rates 
• Inform your employees 
• Complete The Pensions Regulator declarations 

How much do employers contribute to a workplace pension? 

The minimum contribution into a pension scheme for eligible workers is 8% of their qualifying earnings. Employers have to pay at least 3% of this, and can pay in if they choose. The employee will then contribute enough to make it up to 8%. Employees get tax relief from the Government on their contribution, if they’re eligible. 

Ensuring a secure retirement for employees 

Auto enrolment is a significant and essential task for employers. With diligent management employers can ensure compliance and contribute to your employees' retirement. 

How we can help 

At TaxAssist Accountants we can manage your workplace pension scheme and help you and your business stay compliant. For further details about how your local TaxAssist Accountant can help please call 020 8883 5258 or use our easy online contact form. 

Date published 10 May 2024

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

---