Pension Auto Enrolment

Have you seen the ad for Auto Enrolment?  It’s the one with the well known company bosses Karen Brady & Theo Paphitis.

The ad is the start of the Department of Working Pensions campaign to let everyone know from 1st October 2012 employers have been tasked with making sure all their employees have the opportunity to contribute towards a pension.

What they don’t say is auto enrolment is a gradual process with larger companies – those with 120,000 employees or more taking up the process from the 1st October 2012.  And the very smallest companies – those with less than 50 employees having to take up the process by April 2017.

So although it will effect all companies and potentially all employees it may take up to 5 years to do so.

Even then employees have to fit a certain criteria,

  • Most workers will be enrolled if they are aged between 22 and the state pension age
  • However, these workers must be earning at least £8,105 a year
  • They will not be enrolled if they are already in a pension scheme that meets minimum standards
  • They can opt out

Qualifying earnings at the moment are between £5,564 & £42,475 per annum.  This means for any earnings between these two amounts the company will pay 1% of this into a pension scheme and the employee will pay 2%.  These percentages will gradually rise over the next 5 years.

Smaller employers have some time to think and prepare for auto enrolment; do you already have a suitable pension scheme?  Or can you adapt and change the scheme to fit with the auto enrolment criteria?  Do you need to adjust your cash flow to accommodate the increase in employers’ costs?

Do you need help working out the cost, who qualifies etc, End 2 End Payroll can help, email me at or ring me on 07789681786.

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