Pension auto enrolment applies because you have staff, not because the business is large. If you employ people, you normally have to put eligible workers into a workplace pension, pay in the minimum employer contribution, and keep the records. A company with one employee, including a director who is paid through payroll, should check whether the duties apply rather than assume they do not.
Who gets enrolled
Workers who are aged between 22 and state pension age, and who earn over the earnings trigger, are eligible jobholders. You have to enrol them and write to them. They can opt out, but you cannot encourage them to. People outside that group can usually ask to join, and some of them are entitled to an employer contribution if they do.
What you have to pay
The legal minimum is 8% of qualifying earnings: 3% from the employer and 5% from the worker. The worker share is often 4% from their pay plus tax relief. Qualifying earnings are a band set by the government each year, not the whole salary, so the percentage is not applied to every pound. The contribution is calculated in payroll each pay run and paid to the pension provider by their deadline.
Where it goes wrong
The usual problems are a new starter who was never assessed, a contribution paid late, and a director whose pay changed so they crossed the trigger. Re-enrolment also comes around every three years, which is easy to miss if nobody has it in the diary.
We run the assessment inside payroll. If you have taken on your first employee, book a free accounting review and we will tell you whether a scheme needs to be in place before the next pay day.
