Payroll day can feel like a pressure cooker, especially when pensions and auto-enrolment are involved. I’ve seen businesses miss something small — a mis-set contribution percentage, the wrong pay basis, a new starter not assessed — and find themselves facing a compliance headache or a fine. Below I walk through the practical checks I run through with clients before each payroll to avoid surprises and keep The Pensions Regulator (TPR) happy.
Who this checklist is for
This is aimed at UK micro and small employers running regular payrolls who already have an auto-enrolment scheme in place. If you’re setting up auto-enrolment for the first time, many of the same checks apply but you’ll also need to confirm your staging date, choose a pension scheme and complete your initial declaration of compliance.
Quick checklist to run before the next payroll
- Staff records are up to date (dates of birth, NI numbers, start/leaver dates).
- Each employee has a current jobholder status recorded (eligible, non-eligible, entitled, entitled but not eligible).
- Correct pay reference period and pensionable pay basis set in payroll software.
- Pension scheme details entered and active (scheme name, scheme reference, contribution percentages).
- Employer and employee contribution percentages match scheme and legal minimums.
- Any salary sacrifice arrangements are recorded and payroll is calculating NI and pensionable pay correctly.
- New joiners assessed and put into the scheme or enrolled/opted-out as appropriate.
- Pension payments to provider scheduled within the scheme’s required timeframe.
- Re-enrolment and declaration of compliance dates noted in your diary.
Staff records and jobholder categories — don’t skip this
I always start by checking staff data. Auto-enrolment duties depend on age and earnings. Make sure dates of birth and National Insurance numbers are correct in your payroll records — a wrong DOB can change an employee’s category and therefore your duties.
There are four basic categories you should have recorded for every worker each pay period:
- Eligible jobholders — must be automatically enrolled if they meet the age and earnings test.
- Non-eligible jobholders — may be eligible for employer contributions depending on the pay basis; they can opt in.
- Entitled workers — have the right to join a pension but you don’t have to enrol them or contribute unless they opt in.
- Workers not in scope — no auto-enrolment duties for that pay period.
Review joiners and leavers since the last payroll. New starters need an assessment within 6 weeks of starting employment; leaving dates affect contribution calculations and your payment to the provider.
Confirm the pension scheme settings in your payroll software
Payroll software is where things go wrong most often. Open your pension settings and check:
- Scheme name and TPR scheme reference or provider reference are entered correctly.
- Contribution method is correct — percentage of qualifying earnings versus percentage of pensionable pay. Some schemes use total pay, some use qualifying earnings; the difference changes contribution amounts.
- Employer and employee contribution percentages match what you agreed with the provider and meet legal minimums (currently the employer minimum is 3% of qualifying earnings, and the total minimum including employee contributions and tax relief is 8% — check gov.uk for current thresholds and bands).
- Start date for contributions aligns with the payroll period (contributions should start from the correct pay period and not be delayed).
Qualifying earnings vs. pensionable pay — know which one applies
Some schemes calculate contributions on qualifying earnings (a banded amount between lower and upper earnings limits), others on full pay or another agreed pensionable pay basis. If you’ve switched providers or changed the scheme rules, double-check which basis applies. A mismatch will either shortchange contributions (risking compliance action) or overpay (cashflow impact).
Contribution timing and payment runs
Pension providers expect employer and employee contributions to be paid on time — often within 22 days of the end of the tax month if paying by post, or 19 days if paying electronically. Some providers have different cut-off rules. Make sure you know your provider’s deadline and schedule the payment to clear before it.
Also check how your provider wants pension files delivered (CSV, API via payroll software, or platform upload). If you use a payroll bureau, check they’ve submitted the contribution file and that your bank payment has been set up.
Opt-outs and employee communication
If someone opts out during the opt-out window, you must stop contributions and refund any employee contributions already taken within the relevant timeframe (usually within certain limits). Keep copies of opt-out notices and opt-in/opt-out handling in your payroll file.
Also ensure that the required staff communications (joining letters, opt-out info, annual re-enrolment notices) have been issued. TPR can fine employers who fail to communicate properly.
Salary sacrifice arrangements — check the tax and NI treatment
If you offer salary sacrifice for pensions, confirm that your payroll is applying the correct gross pay reductions and NI calculations. Salary sacrifice affects employee pensionable pay and National Insurance, so get this right or you may under- or over-pay NI.
Re-enrolment and your ongoing calendar
Make a diary entry for re-enrolment (every 3 years after your staging date) and the annual re-declaration of compliance deadlines. I keep a simple rolling calendar with:
- Next payroll dates and pension payment cut-offs.
- Employer contribution payment date per provider.
- Re-enrolment window and renewal reminders.
- Annual declaration dates and any CPD or scheme review dates.
Small practical tests I run
- Run a dry payroll for a test employee to confirm contribution amounts and employer costs.
- Export the pension file and check the figures match the payroll summary.
- Check the total employer cost versus last payroll — an unexpected jump usually points to a mis-set percentage or pay basis.
- Confirm that any leaver’s final pay and pension deduction are treated correctly (including any holiday pay elements that might be pensionable).
What happens if something’s wrong — and who to tell
If you discover an error, fix it promptly. Contact your pension provider to arrange corrective payments and keep records of all communications. If the error affects opt-out handling, contributions, or failure to assess, you may need to inform TPR — they have a range of enforcement options, and voluntary disclosure with a prompt fix is viewed more favourably than discovered non-compliance.
Finally, if payroll feels like a swamp of settings and dates, consider using a payroll provider or a pension integration-friendly software such as BrightPay, Xero Payroll, Sage, or IRIS, or talk to your pension provider (NEST, The People’s Pension, Smart Pension and others all have support teams who’ll help reconcile contribution files).
Do you want a printable checklist version of the above that you can keep with your payroll run notes? Tell me how you run payroll (in-house software, bureau, or outsourced) and I’ll tailor one for you.
