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Workplace Pension Auto-Enrolment – Overview for Small Businesses

Written by Jon Cooper

The law on the provision of Workplace Pensions has been applied in phases since 2012. Eventually, virtually all UK employers will be legally required to automatically enrol most staff into a pension scheme and to make direct contributions.

As per our previous newsletter, all employers with fewer than thirty employees that do not qualify for an exemption will have a legal duty to have an operational Workplace Pension scheme in place. The earliest date for this could be 1st January 2016 and the latest 1st August 2017.

The Workplace Pension scheme applies to all staff who are:

Their entitlement is dependent on their age and salary. For the 2014-15 tax year the details are as follows:

Monthly gross earnings Age  
     From 16 to 21 22 to State Pension State Pension to 74  

£481 and below


Has a right to join a pension scheme


Over £481 up to £833


Has a right to opt in


Over £833


Has a right to opt in


Automatically enrol


Has a right to opt in


These different rights impact your responsibilities as an employer:

Although staff have the right to opt out of your pension scheme, it is against the law to attempt to influence or coerce their decision.

It is a duty of the employer to pay regular contributions to pension scheme based on the total pay of each member of staff. The minimum amounts are:

Date Employer contribution

Total contribution

Before 30/09/17 1% 2% (including 1% staff contribution)
01/10/17 — 30/09/18 2% 5% (including 3% staff contribution)
01/10/18 onwards 3% 8% (including 5% staff contribution)


As well as the contributions, there will be other costs that you will have to bear for:

There will also need to be an investment of time to find the best solution to suit your business.

To ensure that you are compliant, it is critical to ensure your staff records are accurate and up-to-date with their date of birth, pay, National Insurance number and contact details.

In order to administer this process, to manage your ongoing duties and to provide information to the pension provider, it is worth investing in payroll software that is auto-enrolment enabled.

Whatever you decide, remember to ensure that the payroll software or process will work with the pension scheme you choose as there will be a need to transfer data between the two.

If you already have a staff pension scheme, there is no guarantee that this will work for automatic enrolment. If this does not, you will be required to acquire a new scheme that meets the requirements of automatic enrolment.

National Employment Savings Trust (NEST) has been created by the government as an option that all employers can use for automatic enrolment. There are also a wide range of commercial alternatives.

It is important that the scheme you choose is well run, offers good value for both you and your staff and that it will work with the payroll process or software you are using. As a result, plenty of time needs to be given to make sure you make the right choice.

Your staff may well be aware of automatic enrolment. The point where you decide on the pension provider would be a good time to provide them with information.

These tasks need to be completed in advance of your Staging Date.

At this point, you must carry out a formal assessment of your staff to ascertain your duties to each of them. There is a six week limit by which time the pension provider must have all the information needed to make your staff active members of your scheme. For this, you will need to make sure that:

To achieve this, you are required to write to each staff member after your Staging Date to inform them how automatic enrolment applies to them and to explain their rights. In addition, you must notify them that contributions will be deducted from their pay and that they have a right to opt out of your pension scheme if they wish to do so.

On the right of the staff to opt out, there are key points to be aware of:

Once the Workplace Pension has been successfully implemented, you will have ongoing automatic enrolment duties:

Most of these records must be kept for six years except for opt-out notices that need to be kept for four years.

If you fail to complete your ongoing automatic enrolment duties, you could be fined.

Finally, you are required to complete a Declaration of Compliance within five months of your Staging Date. The Pension Regulator indicates that this step should take ‘a day or so’ to complete.

Again, completing your declaration is a legal duty and, if this is not done before the deadline, you could be fined.

We have posted the Pensions Regulator’s guide to the completion of the Declaration of Compliance on our website at the following link:


Although this newsletter is designed to outline the process rather than to provide editorial comment, we must say that Workplace Pension Auto-Enrolment has placed a huge burden on small businesses in terms of time, resources and money.

As a result, we would urge any employer that has the right to an exemption to strongly consider exercising it.  If you meet one of the conditions and would like us to obtain an exemption for your company, please complete the form on the link below and email it back to us at admin@cooperfaure.co.uk.


For those employers who are obliged to operate a pension scheme, we are in discussions with a number of providers with a view to packaging the most cost-effective solution for this.

We hope to have this in place before the summer and we will be contacting our clients on an individual basis.

In the meantime, if you would like any further information or clarification, please email us at welcome@cooperfaure.co.uk.

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