28 September 2015

By  Victoria Williamson, Nwes Business Advisor

Auto-enrolment affects all employers in the UK and the pension reform legislation can be complicated and time consuming:

Are you one of the thousands of small and medium-sized businesses about to reach your auto-enrolment staging dates? Recent research by The Pensions Regulator has found that around two thirds of businesses have yet to start their preparations, and many have no idea when their staging date is, or how much auto-enrolment might cost them. If this sounds familiar, it’s time to act and help is at hand.

As staging dates loom, the research implies that many smaller companies in the UK are struggling to prepare for the implementation of auto-enrolment.

  • Find out your staging date and make a note of it.

You will need your PAYE reference to hand. If you don’t know your PAYE reference, it can be found on a P6/P9 coding notice or on your white payslip booklet P30BC.

Find out your staging date

Your staff are people you pay via a payroll. You must assess them for automatic enrolment based on their ages and how much they earn, regardless of how many hours they work for you.

When assessing who you’ll need to automatically enrol, there are three different categories of staff to consider as illustrated and explained in the table below.


Monthly gross earnings Age Weekly gross earnings
From 16 to 21 From 22 to SPA* From SPA to 74
£486 and below Has a right to join a pension scheme 1 £112 and below
Over £486 up to £833 Has a right to opt in 2 Over £112 up to £192
Over £833 Has a right to opt in Automatically enrol 3 Has a right to opt in Over £192


Figures correct as of 2015/2016.

*SPA = state pension age

1 Has a right to join a pension scheme.  If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions.

2 Has a right to opt in.  If they ask to be put into a pension scheme, you must put them in your automatic enrolment pension scheme and pay regular contributions.

3 Automatically enrol.  You must put these members of staff in your automatic enrolment pension scheme and pay regular contributions. You don’t need to ask their permission. If they give notice, or you give them notice, to leave employment before you have completed this process, you have a choice whether to automatically enrol them or not.

As an employer you are now required by law to set up a qualifying workplace pension scheme and automatically enrol certain employees into that scheme. You are required to make pension contributions for the majority of employees who join and remain in the scheme whilst also complying with other statutory obligations.  It is against the law to try to influence your staff into opting out of your pension scheme.

Financial Penalties

One worrisome aspect to bear in mind is that The Pensions Regulator has the power to impose fines if you fail to comply with the regulations. A fixed penalty notice of £400 can be issued and should you continue to ignore your duties you could face an escalating penalty of between £50 and £10,000 a day.

The recommendation from The Pensions Regulator is that you start preparing for auto-enrolment 12-18 months before your staging date. The earlier you start the easier it will be!

Research data provided by

Lovewell Blake LLP – Accounting and Financial Planning – www.lovewell-blake.co.uk

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