Compliance
Auto-Enrolment Explained
Auto-enrolment requires employers to automatically enrol eligible workers into a qualifying workplace pension and make minimum contributions. Failure to comply can lead to fixed and escalating penalties from The Pensions Regulator.
Quick answer
What are the key takeaways?
Employers must automatically enrol eligible workers aged 22 to state pension age earning over £10,000 per year.
Key takeaways
Employers must automatically enrol eligible workers aged 22 to state pension age earning over £10,000 per year.
Minimum total contributions are 8% of qualifying earnings: at least 3% from the employer and 5% from the employee (including tax relief).
Every employer must re-enrol eligible non-members into their pension scheme every three years.
The Pensions Regulator enforces auto-enrolment and can issue fixed penalty notices and escalating daily fines for non-compliance.
Which workers must be enrolled?
Workers are divided into three categories. Eligible jobholders are aged 22 to state pension age, earn above £10,000 per year and must be automatically enrolled. Non-eligible jobholders earn between the lower earnings limit (£6,240) and £10,000, or are aged 16 to 21 or state pension age to 74 — they can opt in and the employer must contribute if they do.
Entitled workers earn below £6,240 per year — they can request to join a pension but the employer has no obligation to contribute. Understanding which category each worker falls into is the first step in meeting auto-enrolment duties.
What are the minimum contribution rates?
Minimum total contributions under auto-enrolment are 8% of qualifying earnings. Of this, the employer must contribute at least 3% and the employee at least 5% (which includes tax relief at source claimed by the pension provider).
Qualifying earnings for 2026/27 are calculated on the band between £6,240 and £50,270 per year. Employers can choose a different earnings basis — for example total earnings or basic pay — provided the resulting contributions are at least as high as the qualifying-earnings calculation would produce.
What is re-enrolment?
Every three years from their staging date (or the date they first complied with auto-enrolment), employers must re-enrol any eligible workers who previously opted out or ceased membership. This three-yearly cycle continues regardless of staff turnover.
A re-declaration of compliance must also be submitted to The Pensions Regulator within five months of the re-enrolment date. Missing the re-enrolment or re-declaration obligations triggers the same penalty regime as initial non-compliance.
What pension schemes can employers use?
Employers can use any qualifying pension scheme, including NEST (the National Employment Savings Trust set up by the government), other master trusts or group personal pension schemes offered by commercial providers.
NEST is open to all employers and has no minimum or maximum contribution restrictions, making it a common default for smaller employers. The key requirement is that the scheme meets The Pensions Regulator's qualifying criteria.
Questions
What do people ask about auto-enrolment?
These answers cover the practical points clients commonly raise before asking Countify to review their own position.
Ask a different questionA sole director with no other workers is exempt from auto-enrolment duties. Where there are two or more directors, auto-enrolment duties may apply depending on whether the directors have employment contracts.
Employees can opt out within one month of being enrolled and receive a full refund of contributions. The employer must re-enrol them at the next three-year re-enrolment date unless they opt out again.
The Pensions Regulator can issue a fixed penalty notice of £400, followed by escalating penalties of £50 to £10,000 per day depending on the size of the employer. Wilful non-compliance can result in civil court proceedings.
Yes. Countify can advise on worker categorisation, set up the correct payroll deductions, liaise with pension providers and ensure re-enrolment obligations are met on time.
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