How to set up workplace pension auto-enrolment

As a UK employer, you must provide a workplace pension for eligible staff from the moment your first employee starts working for you. You are required by law to choose a qualifying pension scheme, enrol any staff who meet specific age and earnings criteria, and make regular financial contributions into their pension pots.

1. Identify your duties start date

In the past, the government used 'staging dates,' but for new businesses today, your legal duties begin on the duties start date. This is typically the day your first employee starts their contract. You should begin the setup process as soon as you know you are hiring someone to ensure you are compliant from day one.

2. Choose a pension provider

You need to select a pension scheme that is 'qualified' for auto-enrolment. Many small business owners in the UK choose NEST (National Employment Savings Trust), which was set up by the government specifically to ensure every employer has access to a scheme. Other popular options include The People’s Pension or Smart Pension. When choosing, consider:

• Setup costs: Some providers charge an employer setup fee.
• Member fees: Look at what your employees will be charged to manage their money.
• Integration: Check if the provider works well with your chosen payroll software.

3. Assess your staff

Not every employee has to be enrolled automatically, but you must check everyone on your payroll. Use the table below to determine who qualifies:

4. Communicate with your team

You have a legal obligation to write to every member of staff individually to explain how auto-enrolment affects them. You must do this within six weeks of your duties start date. Most pension providers provide template letters that you can simply customise and send out.

5. Set up contributions

The minimum total contribution is 8% of 'qualifying earnings'. Usually, this is split as follows:

• Employer contribution: Minimum 3%
• Employee contribution: 5% (which includes tax relief)

You must deduct the employee's portion from their pay and send both your contribution and theirs to the pension provider every month.

6. Complete your Declaration of Compliance

Once you have set everything up, you must tell The Pensions Regulator how you have met your duties. You must complete your Declaration of Compliance within five months of your duties start date. Failing to do this can result in significant fines, even if you are actually paying into a pension.

Top Tip: Even if you only employ yourself as a Director and have no other staff, you may still need to notify The Pensions Regulator that you are not an employer for auto-enrolment purposes to avoid unnecessary correspondence.