NB    I am not authorised to give financial advice and none is included in the pack.

        The pack is for guidance only and is not advice.  I accept no responsibility for anything that anything anyone does or does not do as a result of reading or using the pack, unless I have accepted instructions to advise.

A version of this pack and more AE and employment related  pension documents with explanatory footnotes (not included in the above) are available in Kelly’s Legal Precedents 21st edition with the 2015 supplement: see the link below.



01     briefing notes about automatic enrolment (AE)


Table of contents

A      Preliminary

B      Who is affected?

C      Information gathering

D      What to do



A1    The most likely situations are:

(a)      the employer has no pension arrangements for its employees; and

(b)      the employer or some of its employees have pension arrangements which were not established for AE.


A2    Each employer needs to know:

(a)      whether or not AE applies at all;

(b)      its “staging date”, which is the date on which AE applies to it;

(c)       which if any of any people who work for it are “job holders” and subject to AE;

(d)      whether any other persons have AE rights, even though not jobholders;

(e)      how much it must pay in contributions;

(f)       what to do; and

(g)      what information must be given, to whom and when.


A3    There will normally be three parts of the process.

(a)      Ascertaining the staging date, which is point (b) above but to do it involves points (a) and (c).

(b)      Making and implementing the AE plan.  A copy of the action suggested by the Pensions Regulator (TPR) can be seen at http://www.thepensionsregulator.gov.uk/employers/planning-for-automatic-enrolment.aspx (accessed 05/07/15).

(c)       Dealing with TPR.  At the start of the process a point of contact must be established: D23 below. Registering a declaration of compliance with TPR not later than five months after the staging date: D24 below.



B1    Company directors are “workers” and are liable to be enrolled, unless they are non-executive.  Salaried partners are normally workers, but equity partners are not.  There are grey areas here, for tax and national insurance as well as pensions.  Sole traders carrying on their own business, whether on their own or with employees, are not liable to be enrolled, but their employees are.  Individuals or couples who in a private and personal capacity employee others, gardeners, nannies etc are very likely to be employers and subject to the AE obligation, but not if they buy the services from gardening or nanny agencies etc or from independent contractors


B2    Anyone employed by an employer under a contract in Great Brittian, whose age and pay is in the categories in the table in B3 below, has the AE rights shown in the table.  If there are any such people the employer could enrol them into an AE scheme, but the alternative of a “qualifying” scheme (paragraph 8 of the short explanation of AE) might be preferred.  A personal pension plan, including one which the employee could choose, can be a “qualifying scheme” and, if the employee remains in it and it continues to be a qualifying scheme, there will be no need to enrol her or him automatically into an AE scheme.   This alternative will reduce, but not wholly eliminate, the work to be done in connection with AE.


B3    The table below shows three categories of persons affected by AE.  The terms with the words “eligible, “non-eligible” and “entitled” are not staturory but were invented by the Pensions Regulator.

(a)      Eligible jobholders, who must be AE’d and for whom the employer must pay contributions.

(b)      Non-eligible jobholders, who may opt-in, ie opt to be enrolled and, if they do, for whom the employer must pay contributions.

(c)       Entitled workers, who have a right to join the scheme but for whom the employer is not required to pay contributions.


age 16 to 21

age 22 to not over state pension age

state pension age to age 74

above earnings trigger (£10,000 pa)

non-eligible jobholders

eligible jobholders

non-eligible jobholders

between amounts in A and C (from £5,824 pa to £10,000 pa)

non-eligible jobholders

under lower qualifying earnings limit (£5,824 pa)

entitled worker

These amounts are expected to increase for each financial year.  The £5,824 is the lower earnings limit for national insurance contributions for 2015/16.




        The following questionnaire provides the basic information to answer the questions in A2 (a) to (d) above.


C1    The employer.

name of organisation or individual(s)


name of person responsible for employment, salaries etc


postal address




email address


telephone number



C2    The jobholders. – Make a copy of this section for each employee and other worker.

Details of everyone who does paid work for the employer, but not contractors and professional advisers.

explanation This information in conjunction with the table in B3 above is to show whether any person is a jobholder and if so what category and should be available on the employer’s PAYE system.  Every worker’s particulars must be checked to determine her or his AE status.

name of employee or worker


job title


date of birth and age


annual rate of pay and qualifying earnings


whether paid under PAYE or gross as “self-employed”


The employer is not subject to AE in respect of persons working for it but not employed by it.  It the employee works under a contract with another person, it is the other person that it responsible for AE.  See C3 below.

Qualifying earnings in a pay reference period of 12 months are gross earnings more than £5,824 and not more than £42,385 and proportionately for pay reference periods of less or more than one year.  Earnings means sum of salary, wages, commission, bonuses and overtime and specified statutory pay (sick, maternity, paternity adoption and shared parental).  A pay reference period is a week unless the worker is paid at some other interval (eg four weekly, monthly, quarterly).  The employer decides whether the pay reference period is aligned to:

(a)      the period in which the earnings are paid; or

(b)      the tax year, ie weeks, months or other periods from 6 April.

So-called self-employed persons can be workers or even incorrectly described employees.  This is a grey area, for tax and national insurance as well as pensions.


C3    Shared employment – part-timers, agency workers, secondment etc

explanation  If anyone in C2 is employed jointly with any other person or body or is provided or seconded  by or to or to any other employer, the following information is needed in order to ascertain whether one or all or the employers is the employer for AE.

name of person(s) employed jointly


name of other organisation


name of contact at other organisation


postal address




email address


telephone number


name of employer responsible for pay and PAYE



C4    Does the employer do its own PAYE calculations and returns?  If Yes, give the details below.  If No and the employer’s adviser is to contact the payroll agency, the advisers will require authority to the payroll agent to agent to disclose information.



PAYE reference number


Number of people in the employer’s PAYE scheme on 1 April 2012


If none date after 1 April 2012 on which the employer first paid PAYE income




name of payroll agency


postal address




main contact name


email address


telephone number




        The remaining questions and answers apply the information obtained under C to answer the remaining questions in B above.  Some of the following can be skipped if the information has been provided under C. 


          Whether AE applies and staging date

D1       Does anyone, but not including independent contractors and professional advisers, work for the employer under a contract?

Details C2.

No    AE does not apply to the employer and there is no need to continue, but AE might apply in the future if the employer does employ anyone.

Yes   Go D2.

D2       What is the employer’s PAYE reference number?

If this is not available, it will be obtained under C4.

Type the PAYE reference number in the box on the TPR website at

http://www.thepensionsregulator.gov.uk/employers/staging-date.aspx (accessed 03/07/15)



D3       Does whoever works for the employer satisfy both the following?

(a)      age 22 or over but not reached state pension age

(b)      paid at the annual rate of over £10,000

See the list and table in B3.

No    The employer are not required to enrol them but must give them notice.

Yes   These persons are jobholders and are subject to AE.  In TPR-jargon they are eligible jobholders.

D4       Does whoever works for the employer satisfy both the following?

(a)      age

(i)        16 to 21 (inclusive) or

(ii)       State pension age to 74 (inclusive)

(b)      paid at the annual rate of over £5,824

See the list and table in B3.

No    The employer are not required to enrol them but must give them notice.  See D20 and go to D5.

Yes   These persons are entitled to require the employer to AE them.  In TPR jargon they are non-eligible jobholders.

D5       Does whoever works for the employer satisfy both the following?

(a)      age

(i)        16 to 21 (inclusive) or

(ii)       State pension age to 74 (inclusive)

(b)      paid at the annual rate of £5,824 or less

See the list and table in B3.

No    The employer are not required to enrol them but must give them notice.  See D20 and go to D6.

Yes   These persons are entitled to require the employer to AE them, but the employer will not be required to pay contributions in respect of them.  In TPR jargon they are entitled workers.

D6       Monitor each present and future worker and the changes in the pay thresholds.

Necessary so that the employer know when workers meets above criteria for AE.


          What pension scheme?

D7       Decide what kind of scheme to provide

The most straightforward choices for small employers are one of the following two types of money purchase scheme:

(a)      personal pension scheme (either stand-alone individual contracts or through a grouped personal pension plan); or

(b)      a centralised occupational scheme such as NEST (see para 10 of the short explanation of AE).

Employers wishing to use or establish a salary related scheme need detailed financial and legal advice.

D8       If the employer already have a pension scheme ascertain whether it is a qualifying scheme, ie it:

(a)      is either an occupational or personal pension scheme registered with HMRC; and

(b)      meets the “quality test”, which in most cases means that the minimum AE contributions are paid (see D12 and the short explanation of AE para 4) but there are alternatives about which advice might be needed.  

AE does not apply to a jobholder who is an active member of a qualifying scheme.

An automatic enrolment scheme is a qualifying scheme that provides for automatic enrolment.

D9       Discuss whether an employee to whom AE applies might effect a personal pension scheme that is a qualifying scheme.

Make the D8 check.

If the employee agrees, this will be simpler and involve less administration than AE (see para 8 of the explanation).

D10    Take any financial and HR advice needed.



          payroll accounting

D11    Decide whether and if so what payroll accounting system to use or what system is used by the employer’s payroll agent.

See C4.

The smooth running of AE is largely dependent on the employer’s payroll system being compatible with the employer’s AE scheme’s system and alerting the employee when the AE status of employees changes.



D12    Decide which of the four basis of calculating contributions is to be used.

(a)      8% of qualifying earnings.

(b)      9% of pensionable earnings if equal to or greater than basic pay.

(c)       8% of pensionable earnings if equal to or greater than basic pay and basic pay is on average at least 85% to total pay.

(d)      7% of total pay

In each case the minimum contributions by the employer are 3%.

The basis in (a) applies automatically unless the employer decided to use one of the alternatives in (b), (c) and (d).

The basis in (b) and (c) are to deal with fluctuating earnings and are likely to be applicable mostly where the employees’ pay depends on commissions and the like.  The illustration in para 4 of the short explanation of AE  are on basis (a) and (d).

The basis in (d) is the simplest because there is no need to monitor and take account of the lower and upper earnings limits.

The percentage amounts shown on the left are the rates in force from October 2018.  the rates at present in force are 1% by each of the employer and the jobholder.

D13    Note the dates on which the present reduced AE rates will increase.

See the tables of contributions rates in the paragraph 4 of the short explanation of AE

D14    Decide whether to pay higher rates of contribution than the above and if so what.



          salary sacrifice

D15    Decide whether:

(a)      to enable employees to pay their contribution by salary sacrifice; and

(b)      if so whether and if so what amount of the employers savings of NICs will be used to increase the employer’s contributions.

NB    Salary sacrifice must be voluntary and cannot be a condition of AE.

See precedent x [10-xxx].



D16    Decide whether or not to defer the AE date by up to three months.

The employer must give the notice about deferment in precedent 9 in  or the AE provider’s equivalent and the worker is entitled to require the employer to enrol her or him before the deferment date.  Deferment is probably too much trouble.

D17    The minimum that an employer is required to tell its workers, who has been enrolled automatically into an AE scheme, is the notice in precedent 6 in , which must be given not later than six weeks after the worker’s AE date.

Do you wish to inform your workers about AE in advance?

Yes   Use explanatory letters in advance, such as those in precedents 3 and 4 in  and .

No    Go to D19.

D18    All eligible jobholders must be enrolled automatically into an AE scheme on the employer’s staging date or later when the worker qualifies for AE, unless deferred.

Unless other arrangements made to be done on line on the AE provider’s website.

D19    Notify Jobholders that they been enrolled automatically into an AE scheme not later than six weeks after the jobholder’s AE date

Employers can use the AE provider’s notice instead of the one in precedent 7 in .


D20    If the employer has non-eligible jobholders or entitled workers the appropriate notices must be sent

Employers can use the AE provider’s notice instead of the ones  in precedent 8 in .


          opting out

D21    All jobholders enrolled automatically into a pension scheme have a right to opt out, but must be re-enrolled after three years, when they can opt out again, and their initial contribution will be refunded.  It might be anticipated that ministers and lay-pastors, who are already members of or in the future join the Ministers’ Pension Fund, will exercise the right to opt out of employers’ AE schemes, but it is illegal to induce them to do so.

The providers of AE schemes should include all opting out information and forms.



D22    The Pension Regulator is responsible for regulating AE, keeps a register of employers, monitors their compliance and requires reporting by employers.

The providers of AE schemes normally provide assistance with regulatory compliance in which case the employer may not need to provide its own.

D23    Registration with TPR.

As soon as possible on line at the following this link: www.tpr.gov.uk/nominate-contact (accessed 05/07/15).

D24    Declaration of compliance

Not later than five months after the staging date at the following link: http://www.thepensionsregulator.gov.uk/employers/automatic-enrolment-declaration.aspx (accessed 05/07/15).