Automatic enrolment and how it might affect you

how automatic enrolment might affect you


MoneyPlus Features Team

4th June 2015 at 4:13pm

Automatic enrolment

Much of the talk about pensions recently has been about the changes that came into effect in April, giving people the freedom to access their pension pot as they wish, from the age of 55. Of course, the amount of ‘freedom’ you have does depend on how much money you have saved.

There is another major change in pensions happening to try and get people saving in the first place. It’s called automatic enrolment.

The basic premise to automatic enrolment is that any employee aged between 22 and the State Pension age, earning over £10,000 a year, will be placed into a workplace pension by their employer. Anyone can opt out if they wish, but of the five million people enrolled so far, over 90% have stayed in.

The detail

Automatic enrolment started in 2012 with the largest employers in the UK, and finishes in 2017 with the very smallest employers – including those employing only one person. Each employer has a staging date by which they must have set up the scheme, and then a period of three months, after which they must have automatically enrolled any eligible employees.

The automatic enrolment contribution rates start low from just 1% of earnings from the employer and 1% from the employee, with the latter subsidised with tax relief. But the rates will rise gradually and by 2018 they will be 3% from the employer and 5% from the employee.

So if you are employed, age 22 or over and earning the equivalent of £10,000 a year, then you should be automatically enrolled into a pension. If you work for a big employer with hundreds or thousands of employees, then that’s most likely happened already. If you work for a small employer, it will happen sometime between now and 2017.


If you’re an employer yourself – even if you just employ a nanny or a carer – then you will be responsible for making this happen and you should check when you have to do it. We can provide you with information on what you need to do and you can find out more here.

If you are self-employed, then you will most likely need to make your own arrangements as you will not be automatically enrolled.

Share your thoughts

Join the conversation and follow us on twitter @StandardLifeUK and Facebook as we’d love to hear from you.  Whether you’re an employee who has been affected by these changes, self-employed and have a burning question or an employer looking for further information, don’t hesitate to get in touch!

This blog and any responses to comments are not financial advice. A pension is an investment. Its value can go up or down and may be worth less than you paid in. Laws and tax rules may change and information is correct as of June 2015.