The government is trying to encourage people to save for retirement.
To help achieve this, employers are required to set up a pension scheme and automatically enrol eligible workers.
Employers and employees contribute into the pension pot based on the employee's qualifying earnings. The current minimum (2019/20) rates are 5% for employees and 3% for employers.
Pension schemes have to meet certain conditions in order to comply with auto-enrolment.
Who is eligible?
Workers aged between 22 and their state pension age who earn more than £10,000 a year must be auto-enrolled in a workplace pension.
Other workers who don't meet these criteria may have the option to join a workplace pension scheme.
How are employers affected?
Employers are responsible for making sure they meet their auto-enrolment duties. This includes:
- identifying eligible workers
- letting staff know how they will be affected
- choosing a pension scheme which meets the conditions for auto-enrolment
- making payments
- ensuring ongoing compliance such as auto enrolling workers who become eligible
- completing a re-declaration of compliance every 3 years to The Pensions Regulator.