Workplace pensions became mandatory for UK employers under auto-enrolment legislation. Every employer, regardless of size, must assess their workers and enrol eligible staff into a qualifying pension scheme. Understanding how staging dates work and how to assess your workforce correctly is fundamental to meeting your legal obligations.

This guide explains the auto-enrolment process from start to finish, helping East Yorkshire businesses navigate their pension duties with confidence.

What is Auto-Enrolment?

Auto-enrolment is the legal requirement for employers to automatically enrol eligible workers into a workplace pension scheme and make contributions to that pension. The Pensions Act 2008 introduced these duties, which rolled out to all employers between 2012 and 2018.

If you employ at least one person, you have auto-enrolment duties. This includes limited companies, partnerships, sole traders with staff, and any organisation that employs workers. Even if your only employee is yourself as a company director, you may still have duties to fulfil.

Understanding Staging Dates

Your staging date was the date by which you needed to have your pension scheme in place and begin auto-enrolling eligible workers. HMRC assigned staging dates based on the size of your PAYE scheme, with larger employers going first.

For most small and micro businesses in East Yorkshire, staging dates fell between 2015 and 2018. If you started employing people after your original staging date, your duties began immediately when you took on your first worker.

New employers today must comply with auto-enrolment from day one. There is no grace period. Your pension scheme needs to be set up and ready before you take on your first member of staff.

Worker Assessment Categories

Auto-enrolment requires you to assess each worker and place them into one of three categories. The category determines what duties you have towards that worker.

Eligible Jobholders

Workers aged between 22 and State Pension age who earn above the earnings trigger (currently £10,000 per year) are eligible jobholders. You must automatically enrol these workers into your pension scheme and make employer contributions.

The assessment happens each pay period. Someone working variable hours might be an eligible jobholder one month and a non-eligible jobholder the next, depending on their earnings. Your payroll system needs to track this.

Non-Eligible Jobholders

Workers aged between 16 and 74 who earn above the lower earnings threshold but below the earnings trigger, or who are outside the 22 to State Pension age bracket but earn above the trigger, fall into this category.

You do not automatically enrol non-eligible jobholders, but they have the right to opt in. If they choose to join, you must enrol them and make employer contributions.

Entitled Workers

Workers aged between 16 and 74 who earn below the lower earnings threshold are entitled workers. They can ask to join the pension scheme, but you do not have to make employer contributions if they do. You must allow them to join if they request it.

Setting Up Your Pension Scheme

Before you can auto-enrol anyone, you need a qualifying workplace pension scheme. The most popular choice for small businesses is NEST, the government-backed scheme designed specifically for auto-enrolment. Other options include schemes from providers like The People’s Pension, NOW: Pensions, and traditional pension providers.

When choosing a scheme, consider the setup process, ongoing administration requirements, investment options available to your workers, and any charges. Some schemes integrate better with certain payroll software than others.

You need to register as an employer with your chosen scheme before your duties start. This can take several weeks, so leave plenty of time. You will receive employer credentials that you use to submit contribution data.

The Enrolment Process

When you identify an eligible jobholder, you have a limited window to enrol them. The enrolment date can be the first day of employment, the first day of the pay period, or a postponement date if you choose to use postponement.

Postponement allows you to delay assessment for up to three months. This can be useful for workers on probation or those with variable hours where initial earnings are uncertain. You must write to the worker telling them about the postponement.

Once enrolled, you send the worker’s details to your pension provider along with contribution amounts. The worker receives a letter from the pension provider confirming their membership and explaining their options, including the right to opt out.

Contribution Rates and Qualifying Earnings

Minimum contributions are based on qualifying earnings, which is the band of earnings between the lower and upper earnings thresholds. The current minimum is 8% of qualifying earnings, with at least 3% coming from the employer.

You can set up your scheme using different calculation methods. Some employers choose to calculate contributions on total earnings from the first pound, which can be simpler to administer. Others use qualifying earnings as the legislation defines.

Whatever method you choose, you must meet the minimum contribution requirements. If you offer a more generous scheme, that counts towards your duties.

Re-Enrolment Duties

Every three years from your staging date, you must re-assess your workforce and re-enrol anyone who previously opted out or left the scheme. This is called cyclical re-enrolment.

You can choose a re-enrolment date within a window around your three-year anniversary. This gives you flexibility to align with convenient dates in your payroll calendar.

After re-enrolling workers, you must complete a re-declaration of compliance, confirming you have met your duties. This goes to The Pensions Regulator.

Getting Support With Auto-Enrolment

Auto-enrolment adds complexity to payroll administration. The assessments, communications, submissions to pension providers, and ongoing compliance monitoring take time and require careful record-keeping.

For businesses across Hull, Beverley, Driffield and East Yorkshire, professional support can make auto-enrolment straightforward. From initial scheme setup through to ongoing administration and re-enrolment, having someone handle the details means you can focus on your business.

If you are setting up auto-enrolment for the first time, approaching a re-enrolment date, or finding the administration burdensome, we can help. Our auto-enrolment services cover everything from choosing and setting up your scheme to managing monthly contributions and worker communications.