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Work out your client's costs

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


We conducted research with small employers who have already met their duties to understand the level of costs being incurred by employers when preparing for automatic enrolment.

Among employers who incurred costs, the research shows that:

  • 61% of employers with one to four staff had no overall set up costs
  • 67% of employers with one to two staff had no overall set up costs
  • among employers who did not have any staff to put into a pension scheme 93% said they did not incur any support or advice costs

Set up costs

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

The figures quoted here are based on employers with between one and four staff members. Costs may be higher if your client employs more staff and depending on their circumstances - for example, some charges may be based on how many staff an employer has, while costs may vary in different regions.

There’s a higher risk of paying more if your client starts the process late and is unprepared. Encourage your client to prepare early to avoid any unnecessary costs.

Suggested price ranges are based on our knowledge of the market in August 2017. However, if you or your client 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.

Time taken

Our research suggests that small employers with between one and four staff members usually spend a total of about 15 hours overall carrying out all their automatic enrolment tasks.       

Advice costs

Small employers told us that if they did pay, the costs typically ranged between £100 and £500 for advice, and the average cost was around £250. 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 that an employer agrees with their business adviser and what tasks the adviser does for their client. When you have agreed what services you will provide and the costs, you should confirm this in writing.

Payroll set up

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

Outsourced payroll

If your client's payroll is run by an accountant, bookkeeper or payroll agency you or your client will need to check if they will include automatic enrolment in their current charges or if your client will have to pay extra. Small employers told us that if they did pay extra, overall this set-up cost was typically between £75 and £300, and the average cost was around £150.

In-house payroll

If your client manages their own payroll and uses payroll software, check if it can already work with automatic enrolment at no additional cost, as many do. If not, your client may face a small increase in cost to make sure it can.

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

Payroll software will make your client's 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 and £150.

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 your client.

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

Our knowledge of the market indicates that set up costs range from £0 to £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 help clients to choose a pension scheme.

Ongoing costs

Your client will also need to pay money into the pension scheme after they have put their staff into it and every time they pay them.

Depending on your client’s circumstances, they 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. Your client should take these costs into account when they make decisions.

Time spent on ongoing duties

We asked employers whose duties had started a year or more previously how much time they spent per month in meeting their ongoing duties, such as processing opt-ins and opt-outs etc. On average, employers reported spending two hours or less per month meeting their ongoing duties. This varied by employer size with 58% of employers with one to four employees spending less than an hour per month.

Costs of ongoing duties

While your client can decide to meet the costs of ongoing duties themselves, they may also decide to outsource this to an external adviser or provider.

We also asked employers whether they paid to get help with meeting their ongoing duties. Around a fifth of medium, small and micro employers reported paying for an external adviser. The average monthly cost reported ranged from £42 for employers with one to four employees, increasing to £100 for employers of five to nine employees, and to £175 for employers of 10 to 49 employees. 

Making contributions

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

The example below shows how to work out their minimum contributions.

For example, the total minimum contribution from April 2019 onward is equivalent to 8% of a member of staff’s gross earnings. The employer must pay at least 3% of this, but can choose to pay the full amount. If the employer decides to do this, the member of staff doesn’t have to pay anything.

  • Date effective: from 6 April 2019 onwards
  • Employer minimum contribution: 3%
  • Staff contribution: 5%
  • Total minimum contribution: 8%

You can also use our online contributions calculator to help work out the costs for each member of staff.

What letters are sent to my clients from TPR?

The Pensions Regulator (TPR) sends out letters and emails to employers to support them with their automatic enrolment duties. These letters form a series of communications which are sent to your clients during the automatic enrolment process, helping them to understand their duties and guiding them through what to do next.

You may find it useful to familiarise yourself with these, to help your clients understand what do to and by when.



The information in understanding your costs comes from various sources, including The Pension Regulator's Post Declaration Survey among employers with a staging date between January and November 2016, and knowledge of the market by The Pension Regulator's Industry Liaison Team as of August 2017.