Pensions auto enrolment – rules, rates & thresholds explained for 2024/25

Updated on 8 December 2023

If you’re an employer in the UK, then you’ll need to be aware of the pensions auto enrolment rules. These regulations came into effect in October 2012, and they require all employers to automatically enrol their employees into a pension scheme.

 
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In this guide, we’ll explain everything you need to know about auto enrolment and how it affects your business. We’ll also provide some tips on how to comply with the regulations.

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  • What auto enrolment is and how it works
  • Who is eligible for auto enrolment
  • How to choose a pension scheme
  • The duties of employers and employees under auto enrolment
  • Penalties for noncompliance
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What is auto enrolment?

Auto enrolment is a system that was introduced in the UK in October 2012. It requires all employers to automatically enrol their employees into a pension scheme. The aim of this system is to encourage more people to save for retirement, and it applies to all employers with at least one employee.

How does auto enrolment work?

When an employee is auto enrolled, they will be automatically added to a pension scheme. The employer must then contribute to the scheme, and the employee will also be required to contribute. These contributions will be based on a percentage of the employee’s salary, and they will be phased in over a period of time.

Who is eligible for auto enrolment?

The auto enrolment scheme applies to all employers with at least one employee. However, not all employees are automatically eligible for enrolment. Only those who meet the following criteria are eligible:

  • They are aged between 22 and State Pension Age
  • They earn more than £192 per week (or £833 per month)
  • They have not already opted out of the scheme

Auto enrolment thresholds

The auto enrolment thresholds are the earnings levels that determine whether or not an employee is eligible for auto enrolment. The thresholds are set at £192 per week (or £833 per month) and they apply to employees who are aged between 22 and State Pension Age.

Auto enrolment qualifying earnings 2024/25

  • Qualifying Earnings Band (QEB) Lower Limit: £6,240
  • Qualifying Earnings Band (QEB) Upper Limit: £50,270
  • Earnings trigger: £10,000

How much must employers contribute in 2024?

The employer must contribute to the pension scheme on behalf of the employee. The amount that they contribute will be based on a percentage of the employee’s salary, and was phased in over a period of time.

Auto enrolment rates 2024/25

The total pension contribution must be a minimum of 8% of salary, where a minimum 3% must be contributed by the employer.

The Duties of employers and employees

Both employers and employees have a duty under auto enrolment. The employer is responsible for automatically enrolling their employees into a pension scheme, while the employee is responsible for making contributions to the scheme. Both parties must comply with the regulations, and there are penalties for non-compliance.

Auto enrolment rules

What are an employer’s duties under auto enrolment?

There are several duties that employers must comply with under auto enrolment. These include:

  • Enrolling all employees who meet the eligibility criteria
  • Contributing to the pension scheme on behalf of the employee
  • Informing the employee about their enrolment in the scheme
  • Providing information about their chosen pension scheme
  • Reviewing and renewing their chosen pension scheme every three years

What are an employee’s duties under auto enrolment?

Employees also have a number of duties under auto enrolment. These include:

  • Contributing to the pension scheme on a regular basis
  • Informing their employer if they wish to opt out of the scheme
  • Reviewing their chosen pension scheme every three years

This is just a brief overview of the pensions auto enrolment rules. For more information, please visit the government’s website or contact the Pensions Advisory Service.

Auto enrolment services

The auto enrolment regulations can be confusing, so it’s important to seek help if you’re not sure how to comply. The Pension Regulator is the organisation responsible for enforcing these regulations, and they offer guidance and support to employers.

How to choose a pension scheme

When an employer is auto enrolling their employees, they will need to choose a pension scheme. There are many different schemes available, and it can be difficult to decide which one is right for your business. The Pensions Advisory Service provides a list of all the approved pension schemes in the UK, and they also offer advice on how to choose a scheme.

What types of auto enrolment pensions are here?

There are three types of auto enrolment pensions. These are:

  • Defined contribution schemes
  • Hybrid schemes
  • Final salary schemes

What is a defined contribution scheme?

A defined contribution scheme is a type of pension that is funded by the employee and the employer. The contributions are invested, and the eventual payout will depend on how well the investments have performed.

What is a hybrid scheme?

A hybrid scheme is a type of pension that combines features of both defined contribution and final salary schemes. The contributions are invested, and the eventual payout will depend on how well the investments have performed. However, unlike a defined contribution scheme, the employer is responsible for paying out a guaranteed income to the employee.

What is a final salary scheme?

A final salary scheme is a type of pension that pays out a fixed amount based on the employee’s final salary and length of service. The contributions are invested, and the eventual payout will depend on how well the investments have performed.

Each scheme has its own benefits and drawbacks, so it’s important to choose one that is right for your employees and your business.

Penalties for Non-compliance

Non-compliance with the auto enrolment scheme can result in heavy fines. The government has set up a penalty system that will penalise employers who do not comply with the regulations. The penalties range from £400 to £100,000, and they are based on the size of the business.

The Pension Regulator can impose financial penalties on employers who do not comply with auto enrolment. These penalties can be up to £500 per day, and they are enforced by The Pensions Regulator’s compliance team.

Frequently asked questions

What is auto enrolment?

Auto enrolment is a system that was introduced in the UK in October 2012. It requires all employers to automatically enrol their employees into a pension scheme.

How does auto enrolment work?

When an employee is auto enrolled, they will be automatically added to a pension scheme. The employer must then contribute to the scheme, and the employee will also be required to contribute. These contributions will be based on a percentage of the employee’s salary, and they will be phased in over a period of time.

Who is eligible for auto enrolment?

The auto enrolment scheme applies to all employers with at least one employee. However, not all employees are automatically eligible for enrolment. Only those who meet the following criteria are eligible:

They are aged between 22 and State Pension Age
They earn more than £192 per week (or £833 per month)
They have not already opted out of the scheme

How do I choose a pension scheme?

When an employer is auto enrolling their employees, they will need to choose a pension scheme. There are many different schemes available, and it can be difficult to decide which one is right for your business. The Pensions Advisory Service provides a list of all the approved pension schemes in the UK, and they also offer advice on how to choose a scheme.

What are the duties of employers and employees under auto enrolment?

Both employers and employees have a duty under auto enrolment. The employer is responsible for automatically enrolling their employees into a pension scheme, while the employee is responsible for making contributions to the scheme. Both parties must comply with the regulations, and there are penalties for noncompliance.

What are the penalties for non-compliance?

A. Noncompliance with the auto enrolment scheme can result in heavy fines. The government has set up a penalty system that will penalise employers who do not comply with the regulations. The penalties range from £400 to £100,000, and they are based on the size of the business.

I’m an employer. Do I have to do anything?

Yes, you do! When your employees reach the age of 22 or come within the age range of eligibility, you are required by law to automatically enrol them into a pension scheme. You must also contribute to the scheme, and your employees will be required to make contributions as well. For more information, please visit the government’s website or contact the Pensions Advisory Service.

I’m an employee. Do I have to do anything?

Yes, you do! You are responsible for making contributions to the pension scheme that your employer has enrolled you in. You must also comply with the regulations, and there are penalties for noncompliance.

What should I do if I want to opt out of the scheme?

If you want to opt out of the pension scheme that your employer has enrolled you in, you must notify them in writing. You can also opt out online, but you must still notify your employer in writing. Your employer will then be responsible for removing you from the scheme.

What happens if I leave my job?

If you leave your job, your employer is no longer responsible for enrolling you into a pension scheme. You will have to find a new employer who offers a pension scheme, or you can enrol in a personal pension plan. For more information, please visit the government’s website or contact the Pensions Advisory Service.

What happens if I move jobs?

If you move jobs, your employer is responsible for transferring your pension scheme membership to your new employer. For more information, please visit the government’s website or contact the Pensions Advisory Service.

What happens if I retire?

If you retire, you will no longer be required to make contributions to the pension scheme. Your employer will continue to contribute to the scheme on your behalf, and you will be able to receive payments from the scheme once you reach retirement age. For more information, please visit the government’s website or contact the Pensions Advisory Service.

This guide provides an overview of auto enrolment and pension rules for UK employers. If you have any further questions, please visit the government’s website or contact the Pensions Advisory Service.

Reviewed by , Managing Director

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