What is auto enrolment?
Auto enrollment requires all employers to enrol eligible employees into a workplace pension scheme.
Once employees are enrolled, and assuming they do not opt out, pension contributions need to be deducted from the employees pay and paid into the chosen scheme along with employer contributions.
Minimum contributions are currently set at 8% of qualifying earnings with at least 3% coming from the employer.
Qualifying earnings thresholds are currently set to earnings between £520 and £4,189 /month.
Single directors: A single person company with a sole director will not need to complete a declaration of compliance and should tell the pensions regulator they are not an employer.
If a director does not have an employment contract, they cannot be a worker and are therefore exempt from automatic enrolment.
This means that a company with one or more directors who do not have contracts of employment is not considered an employer if it does not have any staff other than the director(s).
The company will have no automatic enrolment duties and does not need to complete a declaration of compliance. In this case you should let the pensions regulator know that you're not an employer.
If however you do have other employees. you still have duties in respect of those other employees and are therefore considered an employer. If none of your employees meet the age and earnings criteria (see qualifying staff criteria below) for automatic enrollment, the company still has to complete a declaration of compliance.
If the company's circumstances change so that automatic enrolment duties apply, you'll need to inform us of this as soon as possible. For example if you took on a member of staff other than a director, or if at least two directors started working for you under contracts of employment.
Qualifying staff criteria
In the UK, auto-enrolment regulations state that employers need to enrol qualified staff who normally work in the UK into a qualifying pension scheme. You could be fined if you fail to enrol qualified staff within 3 months of them starting with the company.
Employers must automatically enroll staff who are:
Earning at least £833 per month
Between the age of 22 and state pension age
Normally work in the UK