Auto-enrolment

Definition

Auto-enrolment (automatic enrolment) is the legal duty for UK employers to put eligible workers into a workplace pension and pay contributions. It covers workers aged 22 to State Pension age earning over £10,000 a year. The Pensions Regulator oversees the duties, and employers must write to each worker they enrol explaining the contributions.

Minimum contributions

Most schemes base contributions on qualifying earnings between £6,240 and £50,270 a year. The legal minimum is 8% in total, of which the employer must pay at least 3%.

Directors and single-director companies

A director without an employment contract is not treated as staff for auto-enrolment. A company has no duties if its only workers are directors without contracts, or if it has one director with a contract and no other staff. It only needs to tell The Pensions Regulator it is not an employer if the regulator writes to it.

Duties start when the company employs its first member of staff who is not a director and has an employment contract, and the regulator should be told promptly. SmartFiling’s guide to payroll for a single director covers the PAYE side, and its payroll service includes auto-enrolment pension reporting.

Related questions

Do I need to run payroll if I'm the only director? Yes, if the director is paid £96 or more a week or gets taxable benefits. A pension duty does not usually arise either way.
How do I set up PAYE for my first employee? Register as an employer before the first payday, then assess the new employee for auto-enrolment; see PAYE for a first employee.