Pension auto-enrolment: your legal obligations

Workplace pension auto-enrolment has been mandatory for UK employers since 2012. The rules are well established, but the detail of the obligations — who must be enrolled, what contributions are required, what communications must be sent, and what happens if you get it wrong — is something that HR and payroll teams should revisit regularly.

Auto-enrolment applies to all eligible jobholders: employees who are aged between 22 and state pension age, who earn above the earnings trigger (£10,000 per year in 2025/26), and who work in the UK. These employees must be enrolled into a qualifying pension scheme automatically — they do not opt in, they are enrolled, and they can then choose to opt out if they wish.

Non-eligible jobholders (those earning below the earnings trigger or outside the 22 to state pension age window) and entitled workers (those earning below the lower threshold) are not automatically enrolled but have the right to opt into the scheme and receive employer contributions. Non-eligible jobholders who opt in must receive employer contributions at the qualifying rates. Entitled workers who opt in receive contributions too, but the employer is not obliged to make contributions unless the scheme rules require it.

The minimum contribution rates have been at their current level since April 2019: 8% total, split as at least 3% from the employer and at least 5% from the employee (from their pensionable pay). Many employers base contributions on qualifying earnings (pay between £6,240 and £50,270) rather than total salary. Others use a simplified basis (total pay) or a certification basis. The basis affects how much is contributed for lower-paid staff.

The assessment of who qualifies must happen each time you pay staff. New employees must be assessed on their first payday. Existing staff must be re-assessed at each pay run — someone who was previously non-eligible may become eligible if their earnings increase. This is the assessment process and it must be documented.

Enrolment communications are legally required. When an employee is enrolled, they must receive a written enrolment communication within six weeks of the enrolment date, confirming they have been enrolled, which scheme they are in, what contributions are being made, and their right to opt out. Opt-out notices must be processed within one month — a valid opt-out means you refund the employee's contributions and do not pay employer contributions for the period.

Re-enrolment is required every three years. Employees who have previously opted out or who are not currently in the scheme must be re-enrolled at the re-enrolment date. They can opt out again if they choose. The re-enrolment date is within three months either side of the third anniversary of your staging date (or last re-enrolment). A re-declaration of compliance must be submitted to The Pensions Regulator within five months of the re-enrolment date.

The Pensions Regulator investigates non-compliance actively. Fixed penalty notices start at £400. Escalating penalties for continued non-compliance reach up to £10,000 per day for large employers. The most common failures are: not enrolling eligible staff promptly, not sending enrolment communications, not refunding opt-out contributions promptly, and not completing re-declaration.

See our guide on workplace pension duties: ongoing compliance for the ongoing obligations after initial setup.

Mellow handles auto-enrolment assessment, enrolment communications, contribution calculations, and re-enrolment automatically. [See Mellow pricing →](https://mellowhr.com/pricing)