Automatic enrolment, which is being phased in from October 2012, requires employers to automatically enrol most employees into pension arrangements and make contributions in respect of them. Employers with 50 to 249 persons on their PAYE schemes as at 1 April 2012 have staging dates (i.e. when the requirements first apply to them) between 1 April 2014 and 1 April 2015, with smaller and new employers reaching their staging dates after that. With enrolment being automatic, employees have no choice about whether or not they are enrolled and have contributions deducted from their salaries (although they can then opt out). If the pension scheme provided by their employer proves unattractive, this could cause significant employee relations issues and may give rise to potential claims.

This makes it more important than ever for employers to take care in selecting the pension products they are using for automatic enrolment purposes and in checking the terms of those products. The agreements providers are expecting employers to sign up to in relation to these products are also becoming increasingly complex, because initially there is no direct contract with the individual, and employers, even if they take careful financial advice on their choice of provider, rarely review the terms of that agreement.