Contractual enrolment

Contractual enrolment is an alternative to automatic enrolment.

All employers need to have a pension scheme that can be used for automatic enrolment – but they can choose to use this pension scheme for contractual enrolment instead if they’d like to.

Rather than having to work out which employees need to be put into an automatic enrolment pension scheme, employers can just put all of their employees in.

Each employee has to agree to join the pension scheme, and to have contributions deducted from their salary. This consent is given when they accept the terms set out in their employment contract – that’s why it’s known as ‘contractual enrolment’.

  • the pension scheme used must meet the criteria of an automatic enrolment pension scheme
  • all employees who must be enrolled under automatic enrolment regulations, must instead be contractually enrolled into the pension scheme by their automatic enrolment date
  • employees can’t opt out of the pension scheme
  • if an employee stops being an active member of the contractual enrolment pension scheme, the employer still has a duty to review their status and their eligibility for automatic enrolment
  • all employers must still register with The Pensions Regulator to confirm they’ve complied with the legislation.

So it’s worth noting that contractual enrolment isn’t a way for employers to avoid the automatic enrolment legislation – there are complexities and if in doubt we recommend you take legal advice.