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Understanding auto-enrolment and how it affects your business


Charles Counsell

Executive Director of Automatic Enrolment

Auto-enrolment means all employers must automatically enrol certain staff into a workplace pension scheme and make contributions into it.

So far, automatic enrolment has been a success with more than five million people enrolled and almost 50,000 employers complying with their duties. However, the real challenges lie ahead with ever increasing numbers of small and micro employers reaching their staging dates between June this year and April 2017.  From May 2017, new employers created since April 2012, will also reach their staging dates.  Businesses starting up now will reach their staging date in Autumn 2017.   The staging date is a date set in law when an employer’s legal duty comes into effect. 

More than half a million letters have now been sent to employers across the country alerting them to when their automatic enrolment duties start.  By the end of the summer, The Pensions Regulator will have sent letters to around 1.5 million employers.

We also write to all employers 12 months before their staging date.  Employers who have not yet received a letter should check when they will need to be ready by using the regulator’s online staging date tool to guard against leaving things until the last minute.

The advantage of being new

To meet their duties, employers will need to carry out a number of tasks which will be in addition to the usual day to day running of their business. 

The advantage for potential employers who are setting up their businesses is that when they are getting their systems in place and creating a business plan, they will be able to factor in their automatic enrolment responsibilities from the start.

In order to comply with automatic enrolment, employers must assess staff to see if they are eligible and inform them about how automatic enrolment affects them.  This means that accurate staff data is essential and new employers should take care to ensure they collect and maintain accurate information from the start.

While using payroll software is not a statutory duty, employers who have automated software suitable for automatic enrolment are more likely to comply with their duties on time.  When sourcing software, new businesses would be wise to choose an integrated payroll system that has automatic enrolment functionality.  An essential guide to payroll is available on our website which shows the functions needed for payroll to carry out automatic enrolment tasks.

In order to comply with automatic enrolment duties, employers will also need to identify an automatic enrolment pension scheme that is suitable for their workforce.  When sourcing payroll and researching a pension scheme, employers should check the two systems are compatible. Information about this is available on our website.

Research shows us that seven out of ten employers plan to ask their business adviser for help with automatic enrolment and a new business may want to do the same. When enlisting a business adviser, new businesses can ensure the professional they have chosen can help them with automatic enrolment.

Most employers think that automatic enrolment is a ‘good idea’ and most have complied with their duties without the need for us to use our statutory powers.  We work to ensure all employers have the information they need.  New businesses should regard the regulator’s website as a key source of information when setting up their businesses so that they ensure they are meeting their duties and doing the right thing by the staff that they employ.

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