Every employer in the UK must provide a workplace pension and automatically enrol eligible staff into it. This applies from the day your first employee starts work, whether you run a large company or employ one part-time worker. In practice, you must assess your staff, enrol those who qualify, pay at least the minimum contributions, tell workers in writing, declare compliance to The Pensions Regulator (TPR) and re-enrol staff every three years.
Auto-enrolment is not optional, and the penalties for getting it wrong can be significant. This guide explains exactly what the law requires, the current 2026/27 thresholds, and a step-by-step checklist to keep your business compliant.
Quick Answer: What Are an Employer’s Auto-Enrolment Duties?
UK employers must set up a qualifying workplace pension scheme, enrol eligible workers aged 22 to State Pension age who earn over £10,000 a year, contribute at least 3% of qualifying earnings (with a total minimum of 8%), write to staff about their pension rights, submit a declaration of compliance to TPR within five months of their duties start date, and repeat the process through re-enrolment every three years.
What Is Auto-Enrolment?
Auto-enrolment, also called automatic enrolment, is a government scheme introduced under the Pensions Act 2008 to help more people save for retirement. Instead of asking workers to sign up for a pension, employers must enrol eligible staff automatically. Workers can choose to opt out, but they start in the scheme by default.
The scheme has been one of the most successful UK policy changes of recent decades, with millions of people now saving into a workplace pension who previously had no retirement savings at all. It is regulated by The Pensions Regulator, which has the power to inspect employers and issue fines.
Auto-Enrolment Thresholds for 2026/27
The government reviews auto-enrolment thresholds every tax year. For 2026/27, all thresholds have been frozen at their 2025/26 levels.
| Threshold | Annual Amount (2026/27) | What It Means |
|---|---|---|
| Earnings trigger | £10,000 | Staff earning above this (and in the right age band) must be auto-enrolled |
| Lower limit of qualifying earnings | £6,240 | Contributions are calculated on earnings above this figure |
| Upper limit of qualifying earnings | £50,270 | Minimum contributions are not required on earnings above this figure |
Because the thresholds are frozen while wages continue to rise, more low-paid staff will cross the £10,000 trigger, and a larger share of their pay will attract contributions. Employers should factor this into payroll budgets. You can check the official figures on GOV.UK’s annual review of auto-enrolment thresholds.
Who Must Be Auto-Enrolled?
The law divides your staff into three categories. Each one comes with different duties.
Eligible Jobholders
These are workers who are aged between 22 and State Pension age, earn more than £10,000 a year, and usually work in the UK. You must automatically enrol them and pay employer contributions.
Non-Eligible Jobholders
These are workers who either earn between £6,240 and £10,000 a year and are aged 16 to 74, or earn over £10,000 but are aged 16 to 21 or between State Pension age and 74. You do not have to enrol them automatically, but if they ask to join, you must enrol them and pay employer contributions.
Entitled Workers
These are workers aged 16 to 74 who earn £6,240 or less a year. If they ask to join a pension, you must arrange it, but you are not required to contribute.
Minimum Auto-Enrolment Contributions
The legal minimum total contribution is 8% of a worker’s qualifying earnings. Of this, the employer must pay at least 3%, and the employee usually makes up the remaining 5%, which includes basic rate tax relief.
| Contributor | Minimum Contribution |
|---|---|
| Employer | 3% |
| Employee | 5% (including tax relief) |
| Total | 8% |
Many employers choose to pay more than the minimum to attract and retain staff. Some also use salary sacrifice arrangements, which can reduce National Insurance costs for both the employer and the employee. Your accountant can tell you whether this approach suits your business.
Your Step-by-Step Auto-Enrolment Checklist
1. Know Your Duties Start Date
Your auto-enrolment duties begin on the day your first member of staff starts work. This is called your duties start date. Even if you are a small business or a director-only company that takes on one employee, the duties apply immediately. You can confirm your obligations using TPR’s employer duties checker.
2. Choose a Qualifying Pension Scheme
You must use a pension scheme that meets the legal standards for auto-enrolment. Popular options include NEST (the government-backed scheme), The People’s Pension, NOW: Pensions and schemes run by major insurers. When comparing providers, look at charges, investment options, ease of use and how well the scheme integrates with your payroll software. Find out more on NEST’s employer pages.
3. Assess Your Workforce
Each time you run payroll, you must check every worker’s age and earnings to see whether they have become eligible. This ongoing assessment is easy to overlook, particularly for staff with variable hours, bonuses or overtime. Most modern payroll software does it automatically, which is one reason many employers outsource payroll to an accountant.
4. Enrol Eligible Staff
You must enrol eligible jobholders within six weeks of the date they become eligible. You are allowed to use postponement to delay assessment for up to three months, which can be helpful for temporary or seasonal staff, but you must write to staff to tell them if you use it.
5. Write to Your Staff
You must write to every member of staff, not just those you enrol, within six weeks of their start date or the date they become eligible. The letter must explain how auto-enrolment applies to them and their right to opt in, join or opt out. TPR provides template letters for employers that you can adapt.
6. Start Paying Contributions
Contributions must be deducted through payroll and paid to the pension scheme on time. Late payments are one of the most common reasons employers come to TPR’s attention. Set up a clear monthly process, ideally linked directly to your payroll run.
7. Submit Your Declaration of Compliance
Within five months of your duties start date, you must submit a declaration of compliance to TPR. This confirms you have met your legal duties. Failing to submit it is a breach of the law, even if you have enrolled everyone correctly.
8. Manage Opt-Outs and Opt-Ins
Workers can opt out of the scheme within one month of being enrolled and receive a full refund of their contributions. If they opt out later, contributions usually stay in their pension pot. You must never encourage or pressure staff to opt out. This is illegal and is known as inducement.
9. Keep Accurate Records
You must keep records of how you have met your duties, including the names of staff you have enrolled, contributions paid and the pension scheme details. Most records must be kept for six years. Opt-out notices must be kept for four years.
10. Re-Enrol Staff Every Three Years
Every three years, you must re-enrol any eligible staff who have opted out or stopped contributing. You must then complete a re-declaration of compliance with TPR within five months of your re-enrolment date. This is an ongoing legal duty for as long as you employ staff.
What Happens If You Don’t Comply?
The Pensions Regulator actively monitors employers and takes enforcement action against those who fail to meet their duties. Penalties can include:
- A fixed penalty notice of £400
- An escalating penalty notice of between £50 and £10,000 per day, depending on the number of staff you employ
- Orders to pay back missed contributions, plus interest
- In serious cases, civil penalties or criminal prosecution
Beyond fines, non-compliance can damage staff trust and your reputation as an employer. Find more detail in TPR’s guidance on enforcement and penalties.
Common Auto-Enrolment Mistakes to Avoid
Employers most often get into trouble by forgetting to reassess staff every pay period, using the wrong earnings thresholds, paying contributions late, missing the declaration of compliance deadline, or forgetting re-enrolment. Another frequent error is calculating contributions on the National Insurance lower earnings limit instead of the auto-enrolment lower limit of £6,240, which leads to underpayments.
Are There Changes Coming to Auto-Enrolment?
The Pensions (Extension of Automatic Enrolment) Act 2023 gives the government the power to lower the minimum age for auto-enrolment from 22 to 18 and to remove the lower earnings limit so contributions are paid from the first pound earned. These changes have not yet been brought into force, and no start date has been confirmed. The government has also revived the Pensions Commission to review long-term retirement savings adequacy. Employers should keep an eye on announcements, as these reforms would increase costs for many businesses.
Do Directors Need to Be Auto-Enrolled?
If your company has no employees other than directors, and those directors do not have employment contracts, auto-enrolment duties usually do not apply. However, if a director has a contract of employment and at least one other person is also employed under a contract, the director may need to be assessed in the same way as other staff. You can tell TPR that you have no duties using their online declaration.
Frequently Asked Questions
Do small businesses have to offer auto-enrolment pensions?
Yes. Every UK employer, regardless of size, must comply with auto-enrolment duties from the day their first employee starts work. There are no exemptions based on the number of staff or annual turnover.
What is the minimum employer pension contribution in 2026/27?
The minimum employer contribution is 3% of qualifying earnings, with a combined minimum of 8% when employee contributions are included. Qualifying earnings for 2026/27 are earnings between £6,240 and £50,270 a year.
Can an employee refuse to join the workplace pension?
Employees cannot refuse to be enrolled if they are eligible, but they can opt out once they have been enrolled. If they opt out within one month, they get their contributions back in full. You must re-enrol them every three years if they are still eligible.
How long do I have to enrol a new employee?
You must enrol an eligible employee within six weeks of the date they become eligible. You can use postponement to delay assessment for up to three months, as long as you write to the employee to tell them.
What is a declaration of compliance?
A declaration of compliance is a statement you submit to The Pensions Regulator confirming that you have met your auto-enrolment duties. It must be submitted within five months of your duties start date and again after every re-enrolment.
Can my accountant manage auto-enrolment for me?
Yes. Many employers ask their accountant or payroll provider to handle assessments, enrolments, contribution payments, staff letters and declarations. However, the legal responsibility for compliance always stays with the employer.
Get Auto-Enrolment Right With ATB Solutions
Auto-enrolment is a legal duty that never really ends. From assessing staff every pay period to re-enrolling every three years, there is plenty that can go wrong if you try to manage it alone.
At ATB Solutions, we help UK employers handle payroll and auto-enrolment pensions accurately and on time, so you can focus on running your business. Explore our payroll and accounting services, read our guide on how to choose an accountant in Birmingham, learn more about our team, or contact us today for a free, no-obligation consultation.
