If you employ staff in the UK, you have a legal duty to enrol eligible employees into a workplace pension and contribute towards it. This is not optional, and getting it wrong carries real financial penalties from The Pensions Regulator. This guide covers current 2026/27 contribution rates, who must be enrolled, and how the process actually works.
Quick Answer
Auto-enrolment requires UK employers to automatically enrol eligible staff into a workplace pension. Eligible staff are aged 22 to State Pension age, earning at least £10,000 a year. The minimum total contribution is 8% of qualifying earnings between £6,240 and £50,270, with at least 3% coming from the employer.
What Is Auto-Enrolment?
Auto-enrolment is the legal requirement, introduced from 2012 and now fully rolled out to every UK employer, to automatically put eligible employees into a workplace pension scheme and pay into it alongside them. It exists to help more people build retirement savings, since evidence showed many workers never joined a pension unless enrolled by default.
Who Must Be Auto-Enrolled?
An employee must be automatically enrolled if they meet all three conditions:
- They are aged between 22 and State Pension age
- They earn at least £10,000 a year (the earnings trigger for 2026/27)
- They work in the UK under their contract
Staff outside this age or earnings range are not automatically enrolled, but most can still opt in and receive employer contributions if they ask to join. Employees aged 16 to 21, or between State Pension age and 74, earning above £6,240 can opt in and get an employer contribution. Anyone aged 16 to 74 can join voluntarily even below the earnings threshold, though the employer is not required to contribute in that case.
Qualifying Earnings and Contribution Rates for 2026/27
| Figure | 2026/27 Amount |
|---|---|
| Earnings trigger for auto-enrolment | £10,000 a year |
| Lower level of qualifying earnings | £6,240 a year |
| Upper level of qualifying earnings | £50,270 a year |
| Minimum total contribution | 8% of qualifying earnings |
| Minimum employer contribution | 3% of qualifying earnings |
| Typical employee contribution | 5% of qualifying earnings, including tax relief |
Contributions are calculated only on qualifying earnings, meaning the slice of pay between £6,240 and £50,270, not on the full salary. Earnings below £6,240 and above £50,270 do not attract a contribution.
Worked Example
An employee earning £30,000 a year has qualifying earnings of £23,760, which is £30,000 minus the £6,240 lower threshold. At the 8% minimum total contribution, that works out to £1,900.80 a year, with the employer paying at least 3% of that band, £712.80, and the employee making up the remaining 5%, £1,188, most of which arrives as tax relief rather than a direct deduction from take-home pay.
How Auto-Enrolment Works in Practice
You must assess your workforce, enrol eligible staff within 6 weeks of their eligibility date, and write to every employee explaining how auto-enrolment affects them, whether or not they were enrolled. Contributions are then deducted through your normal payroll process and paid into the pension scheme alongside your employer contribution.
Can Employees Opt Out?
Yes. An employee can opt out within one month of being enrolled and receive a full refund of any contributions already deducted. Opting out after the one-month window still stops future contributions but does not refund what has already been paid in. Employers must not encourage or induce staff to opt out, since this is a breach of the rules that The Pensions Regulator actively investigates.
Re-Enrolment Duties
Every three years, employers must re-assess and re-enrol eligible staff who previously opted out or left the scheme, then complete a re-declaration of compliance with The Pensions Regulator. This is a separate, recurring obligation on top of the initial enrolment, and missing it is one of the more common compliance failures among small employers.
Choosing a Pension Scheme
Most small employers use an established auto-enrolment scheme such as NEST, Smart Pension, or a provider built into their payroll software, rather than setting up a bespoke scheme. Whichever provider you choose must be a qualifying scheme registered with The Pensions Regulator.
Penalties for Non-Compliance
The Pensions Regulator can issue a compliance notice, followed by fixed penalty notices starting at £400, and escalating daily penalty notices for continued non-compliance, calculated by the size of your workforce. Persistent failure can also lead to court action. Keeping accurate records of assessments, enrolments, and contributions is essential evidence if The Pensions Regulator ever queries your compliance.
Salary Sacrifice and Auto-Enrolment
Many employers offer salary sacrifice as a way to make pension contributions, where the employee gives up part of their gross salary in exchange for an employer pension contribution of the same value. Because the sacrificed amount is no longer classed as salary, it reduces employer National Insurance as well as the employee’s own National Insurance and Income Tax, covered in more detail in our guide to employer National Insurance contributions.
Frequently Asked Questions
Who has to be auto-enrolled into a pension?
Employees aged 22 to State Pension age, earning at least £10,000 a year and working in the UK, must be automatically enrolled.
What is the minimum pension contribution in the UK?
8% of qualifying earnings for 2026/27, with at least 3% coming from the employer and the remainder from the employee, including tax relief.
Can an employee opt out of auto-enrolment?
Yes, within one month for a full refund of contributions already made. They can also leave later, but contributions already paid are not refunded after the one-month window.
What happens if an employer does not comply with auto-enrolment?
The Pensions Regulator can issue compliance notices and escalating fixed and daily penalty notices, starting at £400, with further action for continued non-compliance.
Do all employers have to offer a workplace pension?
Yes, every UK employer with at least one member of staff has auto-enrolment duties, regardless of business size.
Key Takeaways
- Staff aged 22 to State Pension age, earning at least £10,000 a year, must be automatically enrolled
- Minimum total contribution is 8% of qualifying earnings, with at least 3% from the employer
- Qualifying earnings run between £6,240 and £50,270 for 2026/27
- Employees can opt out within one month for a full refund
- Employers must re-assess and re-enrol eligible staff every three years
About the Author
This guide was prepared by the Business Mine editorial team, who research and write practical UK business, tax and finance guides. Information is checked against current guidance from The Pensions Regulator and HMRC at the time of publication. This article is provided for general information only and does not constitute financial advice; for advice specific to your circumstances, consult a qualified adviser.
