Taking on your first employee is a big step. Exciting? Yes. A bit daunting? Also yes.
You’re no longer just running your creative business — you’re officially an employer. And one of the first responsibilities that comes with employing someone is workplace pensions, also known as auto-enrolment.
But don’t panic — once you understand a few key principles, the admin becomes much more manageable (and I’ll show you exactly how).
What Is Auto-Enrolment?
Auto-enrolment is the system that ensures most employees in the UK are automatically put into a pension scheme by their employer.
If your employee meets certain criteria, you must enrol them into a workplace pension and contribute towards it.
Who Must Be Enrolled?
| Employee Earnings (per year) | Age | Do you need to auto-enrol them? | Action Required |
|---|---|---|---|
| £10,000+ | 22 to State Pension Age | Yes | Auto-enrol + employer contributions required |
| Below £10,000 but over £6,240 | Any age | No (but they can opt in) | If they opt in, you must contribute |
| £6,240 or below | Any age | No (but they can join) | If they join, you do not have to contribute |
These earnings thresholds apply per job, not per person.
How Much Do You Have to Pay?
The minimum total contribution is currently 8% of the employee’s qualifying earnings, of which:
- Employer pays at least 3%
- Employee pays the remaining 5% (usually deducted from salary)
✅ You can choose to be more generous
❌ You can’t choose to pay less
Qualifying earnings are typically the amount earned between £6,240 and £50,270 (2025/26 thresholds expected to remain similar). Some schemes allow contributions based on full salary (which keeps things simpler).
When Do You Need to Set This All Up?
You must have a pension scheme in place before you pay your first employee.
And within 5 months of becoming an employer, you must submit a Declaration of Compliance to The Pensions Regulator.
This declaration is a big one — forget it and you will be fined.
Which Pension Provider Should You Use?
The most common options for small creative businesses are:
| Provider | Good For | Pros | Considerations |
|---|---|---|---|
| NEST (Government-backed) | Small businesses & start-ups | Free to set up, widely supported | Basic user experience |
| Smart Pension | Small & growing teams | Good app, digital-first | Slightly more admin in setup |
| The People’s Pension | Agencies with fast-growing teams | Flexible, scalable | Fees vary based on setup |
| Penfold / Aviva / Aegon / NOW | If you want a more tailored experience | Slick interfaces, strong comms | Can be pricier depending on scheme design |
If you already have payroll software lined up, choose a provider that integrates directly — it’ll save you time each month.
What Do You Need to Do Each Pay Run?
Once your scheme is live, pension admin becomes part of payroll:
1. Assess employees each month (the payroll software does this).
2. Calculate contributions.
3. Deduct the employee’s share.
4. Submit the pension data file to the pension provider.
5. Pay the contributions to the pension scheme.
6. Most modern payroll software will automate this so long as it’s set up correctly.
Common Mistakes to Avoid
| Mistake | Why It’s a Problem | How to Fix It |
|---|---|---|
| Paying someone first and sorting pensions later | You’ll trigger backdated contributions and potential fines | Set up a scheme before the first payroll |
| Thinking freelancers/contractors don’t count | They might actually be “workers” for auto-enrolment | Get contracts reviewed to confirm status |
| Missing the Declaration of Compliance | Automatic fines | Diarise it or ask your accountant to handle it |
| Stopping contributions when cash flow is tight | This is a legal requirement | Speak to your accountant before pausing anything |
How This Fits Into the Bigger Picture
Providing a pension isn’t just a compliance chore — it’s part of being a good employer.
A strong, simple pension setup shows your new team member that:
- You take their long-term wellbeing seriously
- You’re building a business with foundations
- You’re a credible, responsible employer — not “just winging it”
That matters — especially in the creative industries where trust and culture go a long way.
Need a Hand Getting This Set Up?
Pension setup can feel like a maze the first time around.
If you want:
- A pension scheme chosen that suits your business
- Payroll configured correctly from day one
- Letters, onboarding, and compliance done for you
Just send me a message and we’ll set it up properly — stress-free.
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