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. How do I roll out the scheme to eligible workers? 

A. You must write to each eligible worker to:

  • Let them know how auto-enrolment will affect them
  • Provide details of the value of the employer & worker pension contributions
  • Provide details on the right to opt into the pension scheme for non-eligible workers
  • Provide details of the right to join the pension scheme for entitled workers

B. You must then proceed to auto-enrol eligible workers and non-eligible workers who opt in into the pension scheme within specified timescales

C. You must keep records on:

  • Details of its workers and the dates they became eligible for auto-enrolment
  • Details of any worker opt-in and op-out notices
  • Details of information sent to workers about the pension scheme

2. Can a worker opt out?

Yes. Workers can only opt out after they have been auto-enrolled. They cannot opt out in advance of this. Workers must send a valid opt-out form to the employer.

3. Where can I locate a valid opt-out form?

These forms are provided by the trustees or provider of the pension scheme.

4. What is the statutory opt-out window?

This is where the worker opts-out within one month of them becoming a member of the pension scheme.  Such workers will receive a full refund of contriubutions (less any tax that is due) and will be treated as if they never joined the scheme.

5. What happens if an employee opts out after one month?

The workers right to a refund of contributions will be subject to the pension scheme rules.

6. Can workers opt-in several times in a 12 month period?

Employers are not required to comply with an opt-in notice if the worker has previously opted-in within the past 12 months.

7. Do employers have to auto-enrol workers who previously opted out? 

Yes.  Employers are under a legal duty to auto-enrol workers who previously opted out every 3 years.  Once again, workers can chose to opt out with immediate effect.

8. What are the minimum contributions rates for a money-purchase scheme?

 Minimum employer contributions    Minimum total contributions
From the employer’s staging date to 30 Sept 2017                       1%                    2%
From 1 October 2017 to 30 September 2018                       2%                    5%
From 1 October 2018                       3%                    8%


9. Can employers choose to apply contribution rates above these minimum levels?


10. Who regulates employer’s obligations for auto-enrolment?

The Pensions Regulator can inspect an employer’s records at any time and take enforcement action such as issuing a notice to comply with its auto-enrolment duties, imposing a fixed penalty of £400 and in cases of serious breaches imposing fines of up to £10,000 per day on the employer.  The employer may also be subject to criminal proceedings if it wilfully fails to comply.

11. Can employers meet their obligations in a cost effective way?

Yes.  With careful planning and the right advice, the costs associated with the implementation of auto-enrolment can be minimised.  For example, by awarding part of any planned pay rise as a pension contribution, your obligations will be met in ample time with minimal cost.

12. Where can I go for further information and advice?

If you require support with any part of the pension auto-enrolment scheme, please contact Ramshaw HR.


By Bruce Ramshaw

Principal Consultant


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