Automatic enrolment into the workplace pension scheme has been in motion since 2008 and by next year, every employer in the UK must fulfil their obligations. Whatever sector you’re in, as long as you employ at least one person, contributions must be made for all eligible staff.

It may seem like a complicated process, but if you’re sufficiently prepared then it’s actually fairly simple. However, business owners who don’t comply with the regulations by adding to their employee’s pension can bit hit with hefty fines.

To avoid such a predicament, this article offers some basic insight to how the workplace pension could affect your business, although for complex pension matters it may be necessary to seek specialised accountancy advice.

Eligibility Criteria

For business owners who employ staff, you should be aware of the eligibility criteria for your team. Those who must be automatically enrolled are:

  • Employees who earn at least £10,000, and aged between 22 and their state pension age.

Whilst the following must be enrolled if they request to be:

  • Employees who earn less than £10,000, and aged under 22 and their state pension age.

Although the onus is on staff who don’t want to take part in the scheme to opt out, they should be made aware of this option.

If you hire freelance workers who are counted as self-employed, you don’t count as their boss and these pension duties don’t apply to you.

Effect on Business

By April 2019, employers will need to contribute a minimum of 3 percent into each eligible worker’s pension pot on a monthly basis.

Although larger companies will likely have a separate finance department to cope with these responsibilities, for start-ups and other SMEs the task can create an administrative burden that distracts from growing the company itself.

To ease the pressure, it’s worth investing in payroll software to pay contributions and store employee data, such as PAYE references, dates of birth, salaries and national insurance numbers.

Over 15,000 fines have already been issued by the government for companies who don’t comply. The initial penalty is £400 but will rise every day if you still don’t get your act together. These daily fines depend on the size of your company:

Number of Employees Daily Fine
1 – 4 £50
5 – 49 £500
50 – 249 £2,500


Companies should know their auto enrolment staging date because The Pensions Regulator will have sent a letter detailing this in advance. If yours has been misplaced or sent to the wrong address, check online for further information.

Remember, this staging date shouldn’t be confused with your ‘declaration of compliance’, which is due five months after. A re-declaration of compliance will be required every three years.

You can set up accountancy software that will make automatic payments on your behalf, reducing your workload significantly and ensuring you don’t incur costly fines. If unsure of anything, speak to a professional or visit the ‘duties checker’ online tool that will confirm everything you need to do.  

If you’d like to talk to a professional about the workplace pension and your business, get in touch.

If you’re already compliant with the workplace pension scheme, you might be interested in the What the Future of Pensions Looks Like Now.