Frequently Asked Questions

Pension auto enrolment

Pension auto enrolment has arisen as a consequence of the failure of successive UK governments to encourage employees to save for retirement.

Stakeholder pension schemes

The UK government introduced the requirement for all employers to set up stakeholder pension schemes in 2001. It was expected that the existence of stakeholder pensions and their low administrative costs would lead to a significant increase in the numbers of employees saving for retirement. The number of employees contributing to stakeholder pensions proved to be disappointing.

Pension auto enrolment rules

Pension auto enrolment will apply to the vast majority of employers in the UK.

Smaller and medium sized companies have to commence pension auto enrolment in either 2016 or 2017. Employers are able to find out their staging date from the Pension Regulator’s website.

Under pension auto enrolment, all eligible employees will automatically join their employer’s pension scheme, unless they chose to opt out. Employers are not allowed to encourage their employees to opt out.

Communications from the Pension Regulator

Prior to their staging date, employers will receive a letter from the Pensions Regulator informing them that they need to nominate a contact. The Pension Regulator will then send communications to the contact advising him/her of the actions which the employer needs to undertake.

Rate of contributions under pension auto enrolment

From 1 October 2018, when pension auto enrolment has been fully phased in, contributions must be paid into company pension schemes at the rate of at least 8% of relevant earnings. Employers are required to contribute at least 3% and the employee has to contribute the balance.

Action plan

For further assistance in this matter, or any other issues relating to owner managed businesses please phone Shacklefords Chartered Accountants on 0121 294 6670 or e mail This email address is being protected from spambots. You need JavaScript enabled to view it.

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