Auto-enrolment criteria

 22 Nov 2018

Auto-enrolment was introduced by the government on 1st October 2012 to promote more people to participate in a workplace pension scheme. The initiative was designed automatically enrol people into a workplace pension scheme instead of employees having to make the decision to opt in or employers not offering a pension scheme. Auto-enrolment also forces the employer to make a minimum contribution towards the scheme. 

The scheme commenced initially with larger employers in October 2012 and by February 2018, all existing employers achieved the ability to offer a workplace pension. Furthermore, it’s important for new businesses to offer auto-enrolment to employees, extending the requirements for businesses payroll process.  

Not all workers will automatically be enrolled into the workplace pension scheme, however, employees who meet the eligibility criteria and do not need to take any action if they want to join the pension scheme. 


To be eligible for automatic enrolment, employees must meet several criteria:

  • Are aged between 22 and the state pension age

  • Above the earnings threshold

  • Work in the UK and abide by a contract of employment

Eligible earnings threshold

To be auto-enrolled, employees must earn above £10,000 per annum, however, this will be assessed at the end of each pay period. This consistent re-evaluation means that an employee will be automatically enroled if their earnings increase, even if for a singular pay period. As a consequence, if an employee who’s paid monthly earns above £833, they will meet one of the criteria.

Who are non-eligible jobholders?

Employee’s who are not eligible to be automatically enrolled must fit the following:

  • Between 16 - 21 years old or between state pension age - 74 years old

  • Earn over the eligible earnings threshold

  • Work in the UK and abide by a contract of employment


  • Between 16 - 74 years olf

  • Earn between the lower earnings amount and eligible earnings threshold

  • Work in the UK and abide by a contract of employment

Employees who are classified as non-eligible still have the ability to request to join the workplace pension, whereby the employer must grant them a contribution and all the benefits.

What is the lower earnings amount?

The lower earnings amount is the lowest threshold that someone can choose to opt to join the companies workplace pension. Currently, the government lower earnings amount is £6,032 per annum. However, eligibility for auto-enrolment is assessed at each pay period which means that someone below the lower earnings amount that experiences an earnings increase which takes them above the lower earnings amount has the ability to apply to contribute to the workplace pension, even if the time earning above the lower earnings amount is for a short period.

Opting Out

Every employee has the choice to opt-out from the workplace pension even if they’ve been automatically enroled into the scheme. If an employee wishes to opt-out, they can request for the employer to obtain an opt-out form from the pension provider. The results from opting out are dependent on how long the employee has been in the scheme regardless if they were automatically enrolled or requested. If an employee requests to opt-out within one month of being in the scheme, then all their contributions will be refunded and it will be considered that they did not join the scheme. Alternatively, if the employee requests to opt-out after one month, then all their contributions will be held in the scheme until their eligibility to withdraw pension benefits unless the pension provider has specific terms and conditions which allow for personal contributions to be withdrawn.

How long does opting out last?

Once an employee has opted-out from the scheme, they cannot be automatically enrolled into the scheme within 3 years. After the 3 year period, the employer will review their eligibility and they might be auto-enroled, however, the employee does retain the ability to opt-out again from the workplace pension scheme. The justification for the review after 3 years is that the employee's circumstances may have changed and contributions into the workplace pension may now be suitable.

What might you lose out on if you opt out?

All employee’s who opt-out of the workplace pension scheme will relinquish their benefits of:

  • The employer's contributions

  • The tax relief that the government add to contributions

  • Any benefits that the scheme may pay if you fall ill or are unable to continue working

  • Any benefits that the scheme may pay to your dependents if you were to die.

What options are available for employers to ensure they offer auto-enrolment

As every employer is obliged to offer a workplace pension, auto-enrolment can be an additional challenge for new businesses with low staff numbers. As an employer, you have the option to keep all your payroll and auto-enrolment processes in-house and employ a dedicated employee or perform the processes yourself. Alternatively, payroll bureaus offer an outsourcing solution that ensures professional support, service and reassurance that you’ll not encounter any issues. The payroll companies often provide their services cost per an employee so it’s feasible for every business size.