Automatic Enrolment: What Every (Payroll) Professional Needs to Know

automatic enrolment auto-enrolment


2024/25 Payroll Legislation Guide

The facts, figures, thresholds and allowances for 2024/25, in one handy guide.

The whole realm of retirement seems like a golden time… until your employees start exploring the slightly scary world of pensions. But pensions are something that every employee wants to know about, and every employer needs to understand.

So, in this factsheet we want to throw some light on the (relatively straight-forward once you get started!) process of automatic enrolment. If you’re an employee, there’re some useful nuggets in here for you, and if you’re a payroll professional, we’ve got all the answers you need to make automatic enrolment a breeze.

What is automatic enrolment?

Automatic enrolment (also known as auto-enrolment) is much more exciting than it sounds because it’s all about how employees can protect the future they’re dreaming of.

It’s a system where every employee (who meets a certain criteria) will automatically become part of their organisation’s pension scheme. Without having to ask or do all the research themselves. Because saving for the future’s important, but it’s not something that everyone chooses to prioritise.

In the past, people could choose whether they wanted to be in the company pension scheme – and that’s only if a company scheme even existed.

But since 2018, the onus has been on the organisation rather than the individual to make sure that people’s futures are protected as auto-enrolment became compulsory. Now, every employer in the United Kingdom must have a workplace pension scheme in place and they must automatically enrol all their eligible employees into it.


Why is automatic enrolment a legal requirement?

Automatic enrolment evolved to protect employees by ensuring they get the best financial pre-planning possible to help them prepare for retirement. That sounds pretty good. In fact, the 2008 Pensions Act made it a legal requirement for organisations to

  • offer a workplace pension,

(And, just as importantly,)

  • pay into that pension at a required rate.

Now people know what they’ll be paid, can plan and budget, and build up their pension so they go into their retirement years confident that they have supplemented their state pension. They’ll not only survive their years of retirement with enough to live on, but actually be able to enjoy those years!

Who qualifies for automatic enrolment?

Alright, so automatic enrolment’s now in place in the UK across all businesses. That’s clear. But does that mean that everyone is part of a scheme? Let’s have a look at who qualifies:

To be eligible, you’ve got to be:

  • Aged between 22 and State Pension age
  • Earning at least £10,000 per year
  • Working in the UK – under a contract of employment OR under a contract to provide work or services as part of someone else’s organisation.

And as a payroll professional you’ll need to be sure that everyone who qualifies, gets their automatic enrolment. That means that even if they’re paid by an agency, are on a short-term contract or if they’re away on maternity leave, adoption leave or carer’s leave, they should still be enrolled. See, it’s simple!

What if I’m not eligible for auto-enrolment?

What happens if you’re not actually eligible, but you like the sound of the scheme and you want help from your employer to make sure you’ve got your future sorted? Well, if you earn less than £10,000 annually (but more than £6,240, in this 2024/25 tax year) your employer doesn’t have to automatically enrol you into their scheme. But… you can ask to join, and they must let you join if you would like to and make contributions for you. So it’s enrolment without the auto.

And as a HR or Payroll team member you need to make sure your people are aware of this, and that they know what it means to be enrolled into the scheme.

What are the minimum contributions?

A minimum contribution amount is set every year by the government. That’s the minimum total amount that must be paid into the employee’s pension fund and it’s made up of contributions from you and your employer (plus, the government contributes in the form of tax relief).

For 2024/25 the lower limit is £6,240 and the upper limit is £50,270. Let’s break that down a little…

The minimum contribution is:

  • 5% from employees (including the government’s tax relief)
  • 3% from employers

These are minimum contributions are taken from your ‘qualifying earnings’ before tax or National Insurance contributions are deducted. And your qualifying earnings include this whole list:

Some employers apply the pension contribution to the whole of your earnings, not just to qualifying earnings or basic earnings, the generous people. It all just depends on how your scheme’s set up and whether it takes into account only qualifying earnings, or basic earnings, or total earnings. That means that in some organisations you *might* see your bonuses, overtime or commission reflected in the pension contribution. Chat to your employer to know how much of your earnings you’ll be contributing each year.

If you’re reading this as a payroll professional, you might be starting to feel a little nervous about now. We’ve hit that point where the ‘ifs, ands, ‘n’ buts’ start coming in. Don’t worry, read on and we’ll get you sorted out.

Can I opt-out of automatic enrolment?

Automatic enrolment is compulsory, but staying enrolled isn’t. You can opt-out if you want. You might have found a better pension scheme somewhere else, or you might just prefer to invest your money differently.

But remember, if you qualify for it, then it’s automatic—so you’ll have to proactively opt-out.

Whether you opt in or out, is up to you, and doesn’t affect your rights within the organisation or your job in any way.

If you opt out within the first month of being enroled, any contribution will be refunded. However, in most cases, if you leave the pension scheme more than one month into active membership, you might find that the first contributions have already been taken and will stay in your pension fund. So, if you want out, it’s best to act quickly!

What if I opted out but now, I want back in? Is there re-enrolment?

The good news is that you can opt-out at any time, and you can also re-enrol too.

In most contracts you can’t re-enrol more than once every 12 months.

If you have opted out, your employer will carry out a re-enrolment process every three years, on the anniversary of the organisation’s staging date and if you still qualify during the re-enrolment—meaning you’ll be automatically re-enrolled again. But it’s always your choice to opt-out if you want to. And equally, it’s also your right to re-enrol.

How do I manage automatic enrolment?

This is where we get to the nitty gritty of managing the process and the ins and outs of handling all the data and calculations to make sure everyone’s sorted.

Automatic enrolment’s a good deal for your workforce, but as in all the different aspects of payroll and contributions, it needs good handling. We’ve said it before, and we know we’ll say it again… Getting it right will ensure you’re compliant and your people will receive the correct pay and pension.

Here are 7 steps to managing your automatic enrolment with efficiency and compliance:

  1. Know your staging date. First things first. This is the date when your automatic enrolment duties start. Now, every organisation needs to have automatic enrolment in place when they first open.
  2. Choose a pension scheme. It’s important it meets the requirements for automatic enrolment. You can use a provider that offers a scheme specifically for automatic enrolment, or you can set up your own.
  3. Communicate with your employees. Let them know about the automatic enrolment process and how it’ll affect them. You’ll need to make your teams aware of the pension scheme you’ve chosen, how much they’ll be contributing, their right to opt out and their right to re-join at a later date.
  1. Assess your workforce. Know which of your employees are eligible, and which are not.
  2. Enrol your employees. After all the assessing, checking eligibility, providing information, finally you’re ready to sign people up.
  3. Keep on top of the data: accurate, up to date records of your automatic enrolment process, details of employees who have opted out, or opted in. And records of all enrolment communications with employees.
  4. Keep monitoring eligibility, checking the enrolments, and calculating all the contributions. And any of those employees who opted out—you’ll need to re-assess them every 3 years.



Benefits of automatic enrolment

There’s plenty to like about automatic enrolment. It’s a way of making sure that people are looked after. And as a HR or payroll person, that’s probably a big reason you do your job. Your pension scheme can be an attractive benefit and a good selling point for your teams.

Automatic enrolment will:


1. Encourage saving

We all know this… if people aren’t saving for the future, they could potentially be left with an inadequate retirement income. Offering automatic enrolment makes it easier for employees to join a workforce pension scheme and protect their future selves.

2. Improve financial security

Those enrolling increase their financial security when they reach retirement. They’ll have a regular income and not just a state pension. Automatic enrolment means people will be able to access an income from their pension pot from the age of 55 (just be aware that in 2028 this will become 57!).

3. Increase employee satisfaction

Providing a good workplace pension is an important benefit for employees which can inspire loyalty and increase job satisfaction. Enhanced contributions can take this one step further. An organisation which contributes above and beyond the legal minimum will definitely be popular with their hires. Some schemes offer fixed percentage contributions, others may match contributions up to a certain level, others offer escalators which gradually increase the percentage of contribution over time. All huge incentives for employees to stay put, keep working, and watch their pension grow.

 Automatic enrolment sends a clear message to employees: “We care about your financial wellbeing”.

4. Reduce reliance on state pension

Automatic enrolment leads to more people with private pensions = less of a burden on state pensions = a more sustainable pension system.

Make automatic enrolment work for you

OK, so it’s basically a win-win. We can see that it’s a process that works and the benefits are clear.

But it requires a lot of work from you as an employer because there’re so many factors to keep on top of—especially when you multiply it over 10, or 100, or 1,000 employees.

That’s when a good payroll software could be a massive stress-buster. A payroll solution like Cintra’s. Cintra Pay will streamline the auto-enrolment process in-platform so that you can rest assured not only is automatic enrolment catered for, the rest of your payroll will be a cinch.

Cintra Pay offers everything you need to manage your payroll in-house with accuracy, efficiency and compliance. It takes (almost!) all the hard work off your hands while still leaving you in control.

If you’d like to have a chat and see how we can take the hassle out of automatic enrolment, just get in touch. Book a Cintra demo and see how it can work for you.

Cintra - Payroll Legislation Guide 2425

Payroll Legislation Guide

The facts, figures, thresholds and allowances for 2024/25 spanning tax, National Insurance, pensions, statutory payments and more.

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Danielle Nicholson
Danielle is our Communications and Content Manager, leading the content strategy for Cintra. Outside of her passion for all things copywriting, she loves being on the water in a kayak or taking long walks with her Golden Retriever!