It’s the biggest shake-up of pensions for a generation, resulting in millions of workers being enrolled into saving money for their retirement for the first time.

Despite the high profile publicity, many SME business owners are still unsure of their obligations.

This special two-part Q&A is all about making sense of pension auto-enrolment and giving you the knowledge to make this a pain free process for your business.

1. What is pension auto-enrolment?

A new law requiring employers to automatically enrol eligible workers into a pension scheme and to pay a minimum level of employer contributions.

2. When do I need to implement this?

The date of implementation is dependent on the size of your company as follows:

  • 50 – 249 workers –Start auto-enrolment from April 2014 to April 2015
  • 49 or less workers –Start auto-enrolment from June 2015 to April 2017
  • New employers (Est. after April 12) –Start from May 2017 to Feb 2018

3. Will I be given notice of my auto-enrolment start date?

Yes.  You will be informed in writing by the Pension Regulator approximately 12 months beforehand.

4. Can I postpone my auto-enrolment start date?

Yes. Auto-enrolment can be postponed for up to 3 months from your start date provided that your workers are informed of this in writing.

5. Do I need to enrol all my employees?

No.  Eligibility is dependent on age and earnings and the following group of workers will not need to be auto-enrolled but have the right to opt into the pension scheme, if they wish.

Non-eligible job holders  are those aged 16 to 21 or state pension age to 74 and earn more than £9,440 or be aged 16 to 74 and earn more than £5,668 but at or below £9,440 per year.

6. Which employees must be auto-enrolled?

Those aged 22 but below state pension age and earn more than £9,440 per year.

Those aged 16 to 74 and earn less than £5,668 per year must be given the opportunity to join the pension scheme but they are not entitled to an employer contribution.

7. How do I find a suitable pension scheme and/or seek advice on which scheme would best meet the needs of my business and employees?

You can choose to use a money-purchase scheme (used to purchase a retirement income) or a defined-benefit scheme (such as a final salary pension scheme) as their qualified pension scheme.

There are many pension products available.  For more information please contact

In Part II, we will explore:

* Step by step approach to the implementation of the scheme

* How to manage employees who opt out

* Minimum pension contribution rates

* Enforcement notices for employers who ignore their obligations

* How early pension planning now can save you time and money

You can find out more by reading part two of this article here.

By Bruce Ramshaw

Principal Consultant


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