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Understanding your costs

You may need to think about one-off costs to set up automatic enrolment, as well as the ongoing cost of paying money into the 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 1-4 staff had no overall set up costs
  • 67% of employers with 1-2 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 you pay and the amount of time you spend on setting up automatic enrolment will depend on various factors, including how you use business advisers, how you run your payroll and which pension scheme you choose.

Use this as a guide to help you understand the costs you may face and to help you decide if you want to pay for support.

These figures are based on employers with between one and four staff members. Costs may be higher if you employ more staff and depending on your circumstances, eg some providers or business advisers may charge based on how many staff you have and costs may vary in different regions.

There's a higher risk of paying more if you start the process late and are unprepared. Make sure you prepare early to avoid any unnecessary costs.

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

You may also want to find out if there are any free events organised by local business networks giving information and support to help you carry out your duties.

Your time

Our online step by step guide sets out the steps to take in order to complete automatic enrolment as simply and quickly as possible.

Employers have found that taking the time to read our step by step guide to begin with saved them time overall. If you have read through your steps and are still not clear, you may want to seek additional support.

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 to get set up for automatic enrolment.

Advice costs

While you can carry out the automatic enrolment tasks yourself, you may choose to ask for extra support.

Business advisers offer a range of services that you may find helpful - particularly if you don't have much time or want more help to make the right choices.

If you do choose to pay for advice or support from a business adviser, accountant, bookkeeper, payroll provider or financial adviser, you will need to understand and agree which tasks you and they are doing so that nothing is missed and to agree prices upfront. It's important that you understand what business advisers can do for you so that you can compare prices before you commit to pay, as prices may vary.

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 you agree with your business adviser and what tasks they are doing for you. When you have agreed what services your business adviser is providing to you and the costs, you should ask them to confirm this in writing.

Payroll set up

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

Outsourced payroll

If your payroll is run by an accountant, bookkeeper or payroll agency you will need to check if they will include automatic enrolment in their current charges or if you 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.

Time spent on ongoing duties

We asked employers who were a year into their automatic enrolment duties how much time they spent per month in meeting their ongoing duties, such as processing requests to leave or join their scheme (opt in and opt out), etc. On average, employers reported to have spent two hours or less per month meeting their ongoing duties. This varied by employer size with 58% of employers with 1-4 employees spending less than an hour.

Costs of ongoing duties

While you can decide to meet the costs of ongoing duties yourself, you may also decide to outsource this to an external adviser or provider.

We also asked employers whether they paid to receive help from an adviser with meeting their ongoing duties. Around a fifth of medium, small and micro employers reported to have paid for an external adviser. The average monthly cost reported ranged from £42 for employers with 1-4 employees increasing to £100 for employers of 5 to 9 employees and to £175 for employers of 10 to 49 employees.


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.

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