Pensions auto-enrolment begins

Starting from 1 October 2012, large employers have to enrol eligible employees automatically, and make mandatory employer contributions, into a qualifying workplace pension scheme or the National Employment Savings Trust (Nest). 

Eligible jobholders are those who:

  • are aged between 22 and state pension age;
  • have qualifying earnings of at least the income tax threshold; and
  • are contracted to work in the UK. 

Employers must auto-enrol employees when they reach the income tax threshold but contributions will kick in only from the employee threshold for national insurance contributions. Employees can opt into pension savings where earnings are below these levels but employer contributions will not be mandatory. 

Employers will be able to operate a three-month postponement window for all employees (ie newly eligible existing employees and new employees), so that employees on short-term contracts do not need to be auto-enrolled, although they will be able to opt-in voluntarily during the postponement period. 

The date from which an employer must auto-enrol its employees depends on its PAYE scheme size and reference. Employers will be given a date from which they must auto-enrol (known as their "staging date"), by the Pensions Regulator, if they are using a defined-contribution scheme or the Nest as their qualifying scheme. (Defined-benefit schemes can go live simultaneously for eligible employees after staging is complete in October 2016 but can choose to go live earlier if they wish.)

  • Employment law manual: Pensions The XpertHR employment law manual provides guidance on employers' current and future legal obligations in relation to pensions. 
  • Workplace pension reforms toolkit The Department for Work and Pensions (DWP) has produced an online toolkit to help employers understand the changes to workplace pensions. 
  • Seven steps to prepare for automatic enrolment and Detailed guidance The Pensions Regulator has published information to help employers prepare for auto-enrolment. 
  • Staging timetable (PDF format, 29K) A staging timetable (on the DWP website) sets out the dates by which employers must begin to auto-enrol. On 28 November 2011, the Government announced a change to the timetable so that small businesses (ie those with fewer than 50 employees) will begin automatic enrolment from May 2015. 


Plans still hazy for pension auto-enrolment We look at a number of surveys that examined employers' preparedness for auto-enrolment, the approach that they are likely to take and its potential impact.