What is contractual enrolment?

Contractual enrolment is where workers are enrolled into a pension scheme under the terms of their employment contract and (by reference) the rules of the scheme. By contrast, auto-enrolment is where workers are enrolled automatically into a qualifying scheme in accordance with the statutory regime under the Pensions Act 2008 (PenA 2008).

The main advantage of contractual enrolment is that if the employer enrols all of its workers contractually into a qualifying pension scheme (including those workers who the employer is not required to enrol automatically under statute), it does not need to assess all of its workers under the auto-enrolment regime. For this reason, contractual enrolment is generally perceived as a simpler option to auto-enrolment. However, contractual enrolment could also potentially introduce administrative complexity or confusion due to the way in which it interacts with the auto-enrolment regime. Employers should therefore keep track of which workers have been enrolled contractually and which have been enrolled automatically in order to ensure that they comply with the correct legal requirements.

The Pensions Regulator has issued guidance to help employers comply with their duties under the auto-enrolment regime ('TPR Auto-enrolment Guidance'), including on contractual enrolment and how it interacts with auto-enrolment. In addition, the Pensions Regulator also published a short guide in January