Auto-enrolment workplace pensions explained
In short. UK employers must automatically enrol workers aged 22 to State Pension age who earn over £10,000 a year into a workplace pension. The minimum total contribution is 8% of qualifying earnings — at least 3% from the employer and the remaining 5% from the worker (4% net plus 1% basic-rate tax relief). Workers can opt out within one month and have all contributions refunded.
Auto-enrolment was introduced from 2012 and is now mandatory for every UK employer of every size. The Pensions Regulator enforces compliance and can fine employers that miss deadlines or under-contribute.
Last reviewed: Next review by: 2 min read
Who must be auto-enrolled
- Aged 22 or over, AND
- Under State Pension age, AND
- Earning more than £10,000 in the tax year, AND
- Working in the UK
- Workers who do not meet all four can ask to opt IN; the employer still has to contribute if the worker earns above the lower qualifying threshold (£6,240 in 2025/26)
Contribution rates and qualifying earnings
Minimum total contribution is 8% of qualifying earnings — earnings between £6,240 and £50,270 in 2025/26. The employer must contribute at least 3%; the worker contributes the rest (4% from pay plus 1% basic-rate tax relief added by the pension scheme on the worker's contribution).
Many employers contribute on a more generous basis — either a higher percentage, or on full salary rather than 'qualifying earnings'. The contribution structure is in the scheme's terms and on the annual benefit statement.
Opting out
Workers can opt out within one month of being enrolled and get all their contributions refunded. Opting out after the first month means contributions made up to that point stay invested in the pension. Employers must re-enrol opted-out workers approximately every three years (the next 're-enrolment date').
Opting out usually loses the employer contribution, which is effectively a permanent pay cut for the worker's retirement income.
FAQ
- What if I have two part-time jobs?
- Each employer assesses auto-enrolment separately. A worker earning £8,000 from each of two jobs would not be auto-enrolled by either, but can opt in to both (the employer must contribute on the portion above £6,240).
- Does auto-enrolment apply to self-employed people?
- No. The self-employed have to set up their own pension (a SIPP or stakeholder pension are common). The government has piloted opt-in nudges via Self Assessment but there is no auto-enrolment duty.
- Where does my money go?
- Into the employer's chosen workplace pension scheme — commonly NEST, The People's Pension, Smart Pension, NOW: Pensions or a master trust run by a large insurer. Each scheme has a default investment fund unless the member actively chooses another.