The SMEs Guide to Employee Pensions


New government laws stipulate that every employer must enrol their employees into an automatic pension scheme if they are:

• Earning in excess of £10,000 a year
• Aged over 22
• Working in the UK

Are you setting up a SME pension plan? Prepare for auto-enrolment with our help.

When do I need to auto-enrol staff?

Although many small businesses are already auto-enrolling, the roll out is staggered over 3 years and the official date will depend on when the business was set up. This is known as your staging date.

How do I find out what my staging date is?

Your staging date will usually be sent out to you in advance. You should give yourself plenty of time to organise your finances and select the best pension scheme.

If you don’t know when your staging date is you can find out using your PAYE reference which will be listed on a P6/P9 coding notice. Once you have this information visit The Pensions Regulator website and input your reference to find out the staging date.

Once you find out your date you’ll need to provide a primary point of contact. Important information regarding auto-enrolment will be sent to this person so ideally it should be the business owner or a member of senior staff.

Who should I enrol?

Once you’ve found out when your auto-enrolment date is coming into effect you need to check which members of staff need to be enrolled.

Employees who are aged 22+ and earn over £833 per month must be enrolled in an automatic pension scheme. As an employer you must contribute to their pension scheme. Employees who are aged between 16 and 21 won’t automatically be enrolled but they do have the right to join a pension scheme. You will only have to contribute if they are earning over £486 per month.

How much do I have to contribute?

One of your main auto-enrolment duties will be to make monthly contributions into your employee’s pension scheme. Your employees will also have to make regular contributions. How much both employer and employee have to pay depends on when your staging date is:

• Before 30/9/17 – Minimum employee contribution of 1% – Total contribution of 2%
• Between 1/10/17 – 30/9/18 – Minimum employee contribution of 2% – Total contribution of 5%
• From 1/10/18 onwards – Minimum employee contribution of 3% – Total contribution of 8%

We hope this guide has given you a clear indication of the steps you’ll need to take to enrol your employees in a pension scheme. For additional SME help and advice read more:

An SME Start-up Checklist
Employee Rights: What You Need to Know

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