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Understanding your costs

You may need to think about one-off costs to set up automatic enrolment, as well as the ongoing cost of paying money into the scheme and managing the process.

We conducted research with small employers who have already met their duties which shows that

  • 60% of employers with 1-4 staff had no overall set up costs
  • 70% of employers with 1-2 staff had no overall set up costs
  • 95% of employers who did not have any staff to put into a pension scheme had no overall set up costs

Set up costs

What you pay and the amount of time you spend on setting up automatic enrolment will depend on various factors, including how you use business advisers, how you run your payroll and which pension scheme you choose.

Use this as a guide to help you understand the costs you may face and to help you decide if you want to pay for support.

These figures are based on employers with between one and four staff members. Costs may be higher if you employ more staff and depending on your circumstances, eg some providers or business advisers may charge based on how many staff you have and costs may vary in different regions.

There's a higher risk of paying more if you start the process late and are unprepared. Make sure you prepare early to avoid any unnecessary costs.

Suggested price ranges are also based on our knowledge of the market in February 2016. However, if you find that you are being asked to pay more than these prices, you may want to shop around and see if there are cheaper options available.

You may also want to find out if there are any free events organised by local business networks giving information and support to help you carry out your duties.

Your time

Our online step by step guide sets out the steps to take in order to complete automatic enrolment as simply and quickly as possible.

Employers have found that taking the time to read our step by step guide to begin with saved them time overall. If you have read through your steps and are still not clear, you may want to seek additional support.

Our research suggests that small employers with between one and four staff members usually spend a total of about 10 hours overall carrying out all their automatic enrolment tasks, over a 12 month period before their staging date.

Advice costs

While you can carry out the automatic enrolment tasks yourself, you may choose to ask for extra support.

Business advisers offer a range of services that you may find helpful - particularly if you don't have much time or want more help to make the right choices.

If you do choose to pay for advice or support from a business adviser, accountant, bookkeeper, payroll provider or financial adviser, you will need to understand and agree which tasks you and they are doing so that nothing is missed and to agree prices upfront. It's important that you understand what business advisers can do for you so that you can compare prices before you commit to pay, as prices may vary.

Small employers told us that if they did pay, the costs ranged between £200 and £1000 for advice, and the average cost was around £440. This was for general advice and support to set up for automatic enrolment, which can include choosing a scheme, working out who to put into a scheme, and setting up payroll for automatic enrolment. These costs are national averages and may vary in different regions.

These costs may also vary depending on the level of advice and support you agree with your business adviser and what tasks they are doing for you. When you have agreed what services your business adviser is providing to you and the costs, you should ask them to confirm this in writing.

Payroll set up

Whether you manage payroll yourself or someone does this for you, you will need to find out what automatic enrolment tasks payroll can help you with and whether it will provide all the information that your pension scheme provider needs. Based on our experience most employers didn't have additional costs to make their payroll work for automatic enrolment. However, the information below shows the ranges of costs that some employers had.

If your payroll is run by an accountant, bookkeeper or payroll agency you will need to check if they will include automatic enrolment in their current charges or if you will have to pay extra. Small employers told us that if they did pay extra, overall this set-up cost was between £100 and £400, and the average cost was around £200.

If you manage your own payroll and use payroll software, find out if it can already work with automatic enrolment at no additional cost, as many do. If not, you may face a small increase in cost to make sure it can.

If you upgraded your payroll software for PAYE Real Time Information (RTI), you will still need to check whether it will also work for automatic enrolment.

Payroll software will make your ongoing management of automatic enrolment easier.

Our knowledge of the payroll software market suggests that when employers do have set-up costs they are between £0 – 144.

Pension scheme set up

There are some pension schemes aimed at small employers that do not have set up or monthly charges for automatic enrolment, while other schemes may charge. Some schemes may also manage some or all of the automatic enrolment tasks for you.

You should ask the provider what they will charge you based on how many staff you have and decide which charging method is best for you. You should also ask the provider what charges the scheme members will pay. It is important that you weigh up the costs and charges for both you and your staff against the level of services that the scheme will provide – some of the services may make running automatic enrolment easier for you over the long term.

Our knowledge of the market indicates that set up costs range from £0 – 500.

The National Employment Savings Trust (NEST) is a pension scheme provider that has been set up by the government and must accept all employers that apply to use it for automatic enrolment. They do not have a set-up charge.

Find out what else to consider when you 'choose a pension scheme (or check your existing one)'.

Ongoing costs

You will also need to pay money into the pension scheme, after you've put your staff into it and every time you pay them. This is known as 'making contributions'.

Depending on your circumstances, you may also have ongoing costs for payroll, pension scheme and business advice in addition to, or instead of, set up costs. These will vary and can be annual or monthly administration charges. You should take these costs into account when you are making decisions.

Making contributions to your pension scheme

The amount you and your staff pay into your pension scheme may vary depending on which scheme provider you choose and what you agree with them. However, by law, you and your staff have to make minimum contributions into the scheme.

Find out more information on making contributions to your pension scheme. There you will find an animated video providing an overview of calculating contributions and an infographic on how to calculate contributions.

In addition to making contributions, some pension schemes may also have an ongoing monthly or annual administration charge. This may be instead of charging for set up costs, but some schemes may also ask for a mixture of ongoing charges and a one-off set up cost.

This varies by scheme provider and you should check this when you are choosing a scheme.

Our knowledge of the market suggests some pension schemes may have monthly fees ranging from £0-36.

While most employers don’t have any extra costs of using payroll to work out contributions and who to put into a pension scheme on an ongoing basis, you should check this.

If you outsource your payroll, the ongoing cost may vary on what tasks they do for you. You should check with your provider if this is already included in the charge you pay or if you will have to pay extra.

If you manage your own payroll and use payroll software that has an ongoing charge, you should check if automatic enrolment is included or if you will have to pay extra.

Our knowledge of the payroll software market suggests that monthly payroll software charges range from £0-12 per month.


The information in understanding your costs comes from various sources including The Pension Regulator’s Post Declaration Survey among employers with a staging date in June 2015 and The Pension Regulator’s Industry Liaison Team in February 2016. These figures are liable to change and we will update this information when we identify any significant differences.

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