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Auto enrolment

Since 1 October 2012, large companies have been required to enrol their employees in a workplace pension scheme and contribute a percentage of their employees' earnings to this scheme. A new law requires every employer, whether large or small, to automatically enrol workers in a workplace pension scheme by 2018. 

Stay on top of your auto enrolment programme


Although the current scheme will continue until 2018, all employers will be required, by legislation, to have a workplace pension scheme in place for their employees by 2018. Employers need to enrol their employees in the new pension scheme if they:

  • Are aged between 22 and state pension age

  • Earn more than £10,000 a year

  • Work in the UK

Retirement savings

Auto enrolment has been created to encourage employers to help more people save for their retirement. Every employer must now be responsible for their employees' retirement savings, as well as their salaries, so employers need to pick a pension scheme that works best for their employees.

Understand what you want out of auto enrolment

The effects of auto enrolment on your organisation can be significant. However, with forward planning and commitment, you can mitigate the risks involved. The first step in this process is to understand what you want to get out of auto enrolment. Do you only want to comply with legislation, or do you want to use this opportunity to provide your staff with a meaningful workplace pension scheme?

Cost implications

Despite the final staging date for the smallest companies being 2017, many businesses say they are not ready to meet their impending auto enrolment obligations. Most businesses also underestimate the cost implications involved for their business. For the typical firm with one to four employees, auto enrolment costs will average £11,300 in man-hours. 

The CEBR (Centre for Economics and Business Research) has derived the auto enrolment cost estimates for the typical firm by multiplying the number of hours spent complying by the hourly productivity of the employee responsible for compliance. 

Employers also need to understand that the scope of their auto enrolment requirements includes key departments in the business; they must plan accordingly for this. Finance and HR administrators are expected to handle the day-to-day mechanics of auto enrolment in many businesses, while senior staff are expected to make important strategic decisions, such as which pension scheme to use. This could prove a challenge for some businesses though: Administrative staff could become overburdened with the constant, rolling requirements of auto enrolment, while senior staff might not feel qualified to make strategic, pension-related decisions.

Smaller businesses, which may not have an HR or administration function, will have to decide who takes responsibility for preparing the company for auto enrolment. The obvious choice would be the business owner, although adding a task like this to an already busy workload may prove unsustainable. Many businesses may be forced to hire at least one new member of staff to handle the auto enrolment process, including its set-up and ongoing requirements.

Risks worth considering

The Pensions Regulator is responsible for ensuring that employers comply with their duties and will issue both warning notices and penalties for non-compliance. Your pension provider does mitigate some of the risk, although it's ultimately you, the employer, who is responsible for remaining compliant.

If an employer fails to comply, the Pensions Regulator reserves the right to impose a fine; this could equate up to £2,500 per day.

Our service proposal

Our wealth team can proactively manage your auto enrolment project and drive the engagement with you. Our service is an ongoing relationship that covers full set-up, implementation, communication, and ongoing compliance oversight. This includes:

  • Project planning
  • Workforce assessment
  • Aligning payroll with pension providers
  • Data cleansing
  • Implementation
  • Data testing
  • Postponement
  • Risk mitigation
  • Cost reduction
  • Communication
  • Compliance reviewing
  • Training
  • Administration reduction
  • Salary Sacrifice

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Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

Our United Kingdom business, Sable Private Wealth Management Ltd, is authorised and regulated by the Financial Conduct Authority. Our Companies House registration number is 222501. Our authorisation can be checked on the FCA register here: Our South African business, Sable Private Wealth (Pty) Ltd, is an authorised FSP, regulated by the Financial Services Conduct Authority under licence number 48122.

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