Pension Auto-Enrolment

01/10/2013 Filed under Accounts, HR

From October 2012, the law regarding workplace pensions has changed resulting in ALL employers having a legal duty to “auto enrol” their workers in a qualifying pension scheme and make up to 3% employer contributions.

These changes are set to have a huge impact on employers and if not complied with, will result in significant fines of up to £10,000 per day.

Staging Date

The introduction of this legislation on employers has been staged between October 2012 and October 2017 depending upon the size of their workforce. The date that your duty will apply is known as your ‘staging date’ and you will be notified of this by letter from the Pensions Regulator 12 months in advance.


The fact that you are provided with 12 months’ notice is no coincidence as current advice is that you should start looking at your pension options as early as 9 months in advance of your staging date.

Categorising Workers

Not all workers are to be treated the same regarding auto enrolment. To understand what needs to be done, you will have to assess each worker to identify which individuals are classed as either: eligible jobholder, non-eligible jobholder and entitled worker. Depending upon which class they fall into, your obligations will differ.

Contribution Levels

Contribution levels must meet a minimum criteria based on a percentage of qualifying earnings. To start with, your employer contributions will start at 1% but then increase to 2% and 3% by April 2017. You may also wish to think about devising an alternative strategy above the minimum to help you attract and retain qualify employees.


The Pensions Regulator has the authority to issue financial penalties to employers who do not comply with the new obligations. These penalties start swiftly after your staging date at a fixed rate of £400 but then escalate to a daily rate of up to £10,000 per day on an employer for breaches of their duties.


There are a number of providers whose main purpose is to offer employers cost effective solutions to meet their auto enrolment obligations. However, each provider has their limitations and advice should be sought before engaging with them. Your existing provider may also be able to offer a solution which complies with the current legislation.


Communicating your chosen pension to your workforce is the last piece of the jigsaw with you needing to consider both existing and new employees.

Next Steps

To ensure that clients are fully compliant and avoid costly penalties, we are pleased to offer you a FREE Auto-Enrolment Consultation with and Cottons Financial Planning Group Limited , our pension partner on your premises. To arrange yours, please contact Christine Wood at our Rochdale Office on 01706 638076 or