Employer duties under auto-enrolment

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Most employers are now on their way with RTI and with hardly time for a sigh of relief, it will be time to think about automatic enrolment, the 'next big thing' on the horizon. Or will it? Anecdotally, we have been hearing of employers who believe their agent will take care of all that for them.

As an agent is that what you are planning to do for your clients? No? I thought not, but that means it’s time for you to have a...

  • Background to auto enrolment
  • Employer duties
  • Auto enrolment
  • Staging dates
  • Assessing the workforce
  • Eligible jobholders
  • Non-eligible jobholders
  • Entitled worker 
  • Assessment dates
  • Qualifying earnings
  • Communication
  • Whose job is it anyway?

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About Helen Hargreaves


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By Red1960
22nd May 2013 12:08

Thank god the government is committed to cutting red tape!

Thanks (2)
22nd May 2013 13:55

Think tank

I went to the think tank meeting in Westminster where certain people were invited to comment on this about 5 years ago.

The majority of employers said,,,,, we dont want it... 

Thank you for your comments said the government....and took no notice...


I decided to not go to anymore I was invited to as they were just a PR exercise in my opinion.

Thanks (1)
22nd May 2013 15:14

Very Small Businesses

So, how many small businesses who employ 1 or 2 people, will decide that "enough is enough" and simply give up?

It is obvious that this government (and very probably any other government whose members come from the privileged political classes) has no concept of  someone who is "self-employed" and is effectively only interested in making a reasonable living. They have no aspirations to become major players in business and make huge pots of money but they do need to employ a couple of people to enable themselves to have a reasonable work/life balance.

All employers are now being treated as "major players" - it seems to be suggesting that all employers are effectively screwing[***] their workers and isn't this government doing a wonderful thing by making the "big bad employer" look after their "poor, hard-working employees" and contribute to their retirement fund!

What about the poor hard-working self employed person who at the moment would rather scrape a living working for themselves and can't afford to pay into a pension scheme themselves but will now be forced to arrange a pension for their one and only employee, without whom they can't manage? They may decide to cease trading, make their employee(s) redundant and both parties can then claim benefits!

Yet again another burden laid on the SMALL employer!

Thanks (3)
22nd May 2013 16:20


Stupid question, but is the a cheap gov option we can "opt in" all the poor sods into and then "opt out" again along the lines of the current stakeholders scheme? Or does every small firm in the land have cough up a couple of thousand pounds to a big bank and an IFA to set this up, just so all the employees can opt out again?

Majority of small co.s (like my own) will be leaning hard on their staff to all opt out to avoid the paperwork.


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to Tax Dragon
23rd May 2013 11:12

Cheap or default option

I have been told in passing that the default option for small employers that can't afford the IFA fees will be NEST http://www.nestpensions.org.uk/  but have not really looked into it yet. As pensions are an investment decision for the employers/workers it is going to be difficult to avoid some IFA fees unless you are qualified to give investment advice. Giving opt-out advice is very restricted and 'leaning hard' became illigal on 1 July 2012. The Pensions Regulator gives lots of free advice http://www.thepensionsregulator.gov.uk/  but I found the article above much clearer. 

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to Tax Dragon
28th May 2014 14:52

"Majority of small co.s (like

"Majority of small co.s (like my own) will be leaning hard on their staff to all opt out to avoid the paperwork."

Just FYI, this is strictly illegal under the bribery act of 2010. Also it creates no more paperwork for you. You would still have to opt them in, then they would have to opt out with your pension provider. 

Thanks (0)
23rd May 2013 12:11

Cheap or Default option

An excellent article, Heather and you are quite right, the NEST option is available with no cost to employers. It also has a default investment strategy, so that in most cases an employer would not be classed as 'giving advice' by using NEST.

However, NEST does not offer any real back up on complying with the other employer's duties, so here an employer would probably need to buy some support. One example might be an additional module to a payroll package. This may or may not cover all the employer's duties, depending upon the payroll package chosen.

Many firms are using independent middleware, that will work with any pension (including NEST) or payroll provider, to take the problem away. This works by 'joining the gaps' between pension and payroll with no or minimal manual involvement and covers everything from initial communications to record keeping. An example is here http://www.clearworkplace.co.uk/  but others are available.

In terms of 'leaning on' employees to opt out, there are a few considerations. Firstly, as Heather correctly points out, this is illegal. However, some employers may well take the view that the Pensions Regulator can't micro manage or police every small firm in the land. The risk is, of course, that a disgruntled employee can easily 'blow the whistle' on this type of behaviour, which could end up very costly.

The other thing is that, even if you were to 'force' everyone to 'opt out' - which I do not condone - you would still have had to set everything up and deduct the first contribution to enrol them in the first place! 


Thanks (1)
24th May 2013 11:59


@heather and Nigel thanks for that;

Re "leaning" is a pragmatic business decision. Yes there is the risk that an ex-employee makes a complaint, but I still cant see much happening even if they do. You have to remember in a 2-3 person business its a very close relationship between staff and owner. You certainly wouldn't complain if you still wanted the job!

For the typical one or two employee business this is a huge headache. There is not going to be a budget for independent advice. Its simply not going to happen.  

The game will be to comply with the regulation with the minimum possible time and cost, or if that cant be done. don't do it at all, or consider firing the staff member and only hiring contractors. 

I note the penalties are £400 but these only arise after you get a warning. So I imagine the smart small employer does nothing until they are warned. If its anything like the current (widely ignored) system for 5 or more employees then no warnings will be issued in the first place and nothing much will happen.  This hopefully will buy some more time until the issues of the very small business are properly thought about in the rules. I forsee a relaxation once the sheer volume of employers with one or two employees is realised by those who set the rules.  Just as its suddenly dawned on HMRC how many "director only" payrolls there actually are under RTI and why they want to run annual schemes, not monthly ones. 

For example a huge time/cost saving would be you can show your sole employee is opted out, then no need for an empty scheme. Ie you present your new employee with an opt out form on their first day, just as used to happen with the working time directive (which seems to be completely ignored now) and of course tell them where they can get advice on the matter. 

Anyway several years yet until this hits for my size of clients.


Thanks (0)
24th May 2013 19:44

Opting-out Option

Yesterday, Nigel Sycamore wrote "even if you were to 'force' everyone to 'opt out' - which I do not condone - you would still have had to set everything up and deduct the first contribution to enrol them in the first place!".

Is it true that, even when an eligible employee is going to opt-out upon commencement of employment, it is mandatory to deduct a contribution from the first week's/month's pay?  If so, would it be refundible?

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By Vince54
24th May 2013 21:32

Opting Out Option

Further to songb1rd's comments, it is not mandatory to deduct a contribution from the first week's/month's pay.  Having said that, an employer needs to have some slick admin procedures in place to avoid having to make a deduction owing to the restrictions under the safeguarding aspects of auto enrolment as to who can supply the opt out notice.  Only in "exceptional circumstances" (Pension Regulator's advice) will an employer be able to provide this, and certainly not on the employee's first day or as part of any introductory paperwork.

If the employee opts out within the 'opt-out window' (generally one month from being auto enrolled), then both the employee and employer contributions are refundable.

If using NEST and opt out happens after the opt out window, then under current rules neither employee nor employer contributions are refundable.  For schemes other than NEST it will be depend on the scheme rules.

Thanks (0)
25th May 2013 12:48

Slick Opt-out option?

Thank you Vince54, and, looking deeper into the NEST and Pension Regulator's websites, opting-out does seem more cumbersome of a process that I'd first imagined.

I have a client company whose sole activity is the provision of children’s sports activities during the Easter break (3 weeks) and the summer holidays (7 weeks).  Each year, about 50 or more “assistants” are employed (no more that about twenty in any one week) – a mix of older schoolchildren, university students, and graduates.  Some are “regulars”, though most employees change as the years go by.

A handful of employees will undoubtedly be "Eligible Jobholders", but of these, some or even all of them may work for one or two weeks only for my client in the year - and be gone before they receive their "Welcome Pack" from the pension provider to enable them to opt out...

Do readers have any slick ideas about opting-out under these sorts of circumstances?

Thanks (0)
26th May 2013 20:22

Very Small Businesses

Many of my clients are one person businesses, many of them hairdressers. Currently their full time staff are earning more than they are, but they want to avoid being another burden on the State. But the cost and the problems with yet another piece of legislation will tip them over the edge. So, instead of having 3 employed and one self employed people, in future there will be another 4 unemployed people. This scenario will be repeated many times across the country.

But, as one MP rightly said 'If you pay peanuts, you get monkeys', and they certainly have proved to be monkeys with this proposal. 

Thanks (0)
27th May 2013 10:51

Very temporary workers

Try [email protected]  to clarify but hopefully sensible use of 'postponement' would apply.

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27th May 2013 10:50


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