Auto-enrolment for workplace pensions can feel like a slow-moving compliance landmine for small businesses: it’s not glamorous, but get it wrong and you can face stiff fines, unexpected employer contributions and a lot of time spent answering The Pensions Regulator. I’ve seen many clients trip up on the same recurring issues — most are preventable with a few practical checks built into your payroll routine.

Why proactive checks matter

I treat auto-enrolment like a safety walkaround for payroll. It’s not just a once-a-year task; changes in staff, pay, or payroll software can introduce errors that compound over months. A missed opt‑out, incorrect pensionable earnings calculation, or failure to re-enrol can quickly escalate into arrears and penalty notices from The Pensions Regulator. Running short, regular checks saves time and reputations down the line.

Quick checklist to run every pay period

Make these checks part of your payroll close process. They take 5–15 minutes but prevent costly follow-ups.

  • Confirm enrolment status for each employee (eligible, non-eligible, entitled, or pension scheme member).
  • Verify payroll codes and paygroup mappings are correct for pension deductions.
  • Check auto-enrolment earnings thresholds and band earnings are applied to the right pay periods.
  • Ensure employer and employee contributions are calculated at the agreed percentages and rounding rules are consistent.
  • Spot-check new starters and leavers within the pay period — are they added/removed from pensions workflows?
  • Review opt-outs and refunds: has anyone opted out within the 1–3 month refund window?

    • Common errors I find and exactly how to fix them

    Below I’ve listed problems I regularly uncover during client reviews, with pragmatic fixes you can apply straight away.

    Problem How it shows up Immediate fix
    Incorrect eligibility status Employee marked as non-eligible but actually earns above threshold Manually review earnings over relevant pay periods; update status in payroll/RTI and auto-enrol where necessary; notify employee and log re-enrolment.
    Wrong pensionable pay basis Bonuses or overtime excluded/included incorrectly Check scheme rules and payroll settings (gross vs banded earnings); reprocess contributions for affected periods; notify The Pensions Regulator if arrears result.
    Missed new starters New employee receives no enrolment communication Run a new-starter audit each pay run; issue the required AE letters; auto-enrol eligible staff immediately and record dates.
    Contribution percentage mismatch Employer or employee contribution rate incorrect Correct payroll templates, re-calculate missed amounts, and arrange to collect/pay arrears; update payroll provider settings to prevent recurrence.
    Late or missing payments to scheme Scheme reports show unpaid contributions Prioritise clearing payments; inform provider and The Pensions Regulator if you anticipate delays; update cashflow forecasts to prevent repeats.

    How to use payroll software to reduce mistakes

    Most of my clients use Xero, QuickBooks, Sage or IRIS. These systems can automate a lot but only if they’re set up correctly. I recommend:

  • Using built-in auto-enrolment modules rather than manual spreadsheets — they record dates and calculations and produce letters.
  • Setting up validation rules in your payroll software to flag entries where pension contributions are zero for eligible staff.
  • Keeping employee records synchronised: HR and payroll data must match for pay frequency, start dates and contract types.
  • Running payroll in a test/preview mode and reviewing the auto-enrolment report before finalising payments.

    • Practical steps when you discover an error

    If you find a mistake, act quickly and document everything. Here’s my step-by-step approach:

  • Identify the scope — which employees and which pay periods are affected?
  • Calculate arrears precisely: employer contributions, employee deductions (if refundable) and any interest if required by your scheme.
  • Contact your pension provider to arrange payment and confirm whether the scheme expects any particular format or evidence.
  • Update payroll records and, where appropriate, submit corrected RTI (Full Payment Submission or Earlier Year Update) to HMRC.
  • Inform the employee(s) in clear, plain English — explain what happened, what you’re doing to fix it and any action they need to take.
  • Log the incident, steps taken and dates so you have an audit trail for The Pensions Regulator.

    • Handling opt-outs and refunds

    Opt-outs are a common source of confusion. Employees have a statutory window to opt out and request refunds of employee contributions. I always advise clients to:

  • Process opt-outs promptly — if an employee opts out within the refund window, you must refund their contributions (the employer portion is usually kept).
  • Check whether your pension provider charges for processing opt-outs or refund requests; factor this into your payroll admin costings.
  • Keep clear copies of opt‑out forms or online confirmations; these are essential if The Pensions Regulator queries the case.

    • Spot audits that save time

    Every quarter, I run a mini audit with these focused checks — they often pick up issues before they cause real problems:

  • Cross‑check a sample of payrolls against the pension provider remit report to ensure amounts sent match payroll deductions.
  • Compare the number of active scheme members in payroll vs the pension provider list.
  • Test a random new starter to ensure the AE communication workflow triggered correctly.

    • When to involve an expert or The Pensions Regulator

    If you’re facing complex arrears, a dispute with a pension provider, or you’ve missed significant re-enrolment obligations, get specialist help. I recommend contacting a payroll/accounting advisor or a pensions consultant — or if you suspect a breach of duties, notify The Pensions Regulator early. They’re often reasonable if you report issues proactively and show you’re taking steps to fix them.

    Pension compliance isn’t glamorous, but it’s manageable. With simple repeatable checks, correct payroll setup and clear documentation, you can catch most mistakes long before they become costly. I build these checks into my clients’ payroll workflows and it’s one of the best investments of time for protecting cashflow and avoiding regulatory headaches.