Since 2012, most UK employers have had to automatically enrol eligible staff into a workplace pension and contribute towards it. The phased introduction finished back in 2019, but the guidance many businesses (and employees) are working from hasn’t always kept up. Here’s where things actually stand for 2026/27.
The basics, as they stand today
The minimum total contribution has been fixed at 8% of qualifying earnings since April 2019 – at least 3% from the employer, with the rest typically made up by the employee (including tax relief). Many employers contribute more than the minimum, particularly as part of a wider benefits package used to attract and retain staff.
Who has to be enrolled?
An employer must automatically enrol any worker who:
- is aged between 22 and State Pension age,
- earns above £10,000 a year (the “earnings trigger”), and
- works, or ordinarily works, in the UK.
Contributions themselves are calculated on “qualifying earnings” – the band between £6,240 and £50,270 for 2026/27 – not on total salary. Workers aged 16 to 74 earning more than £6,240 who don’t meet all the automatic criteria (for example, because they’re aged 16 to 21, or earn less than £10,000) can opt in, and their employer must contribute. Those earning £6,240 or less can ask to join, but the employer doesn’t have to contribute.
What employers need to keep on top of
- Assessing the workforce and enrolling eligible staff – an ongoing duty for every new employee, not just a one-off exercise.
- Choosing and maintaining a qualifying pension scheme (commonly NEST, or a workplace scheme through a provider), with charges capped at 0.75% a year for the default fund of qualifying defined contribution schemes used for auto-enrolment.
- Re-enrolling eligible staff who previously opted out, every three years.
- Keeping accurate records and responding to The Pensions Regulator’s compliance checks – non-compliance can lead to fixed penalty and escalating daily fines.
Salary sacrifice: an often under-used option
Many employers can offer pension contributions via salary sacrifice, where the employee gives up part of their salary in exchange for an equivalent (or enhanced) employer pension contribution. Because the sacrificed amount never counts as salary, both employer and employee save on National Insurance – a straightforward way to make existing pension spend go further, for both sides. From 6 April 2029, this saving will be capped: only the first £2,000 a year of pension contributions made through salary sacrifice will be free of National Insurance. Contributions above that will still receive income tax relief, but will attract National Insurance as normal – so now is a good time for employers to review how their scheme is set up. Salary sacrifice cannot reduce an employee’s cash earnings below the National Minimum Wage and can affect certain salary-related benefits, so it needs to be structured carefully. It’s one of the first things we review as part of our Employee Benefits service.
What it means for employees
For staff, the main things worth understanding are: contributions are automatically taken unless you actively opt out; you can usually increase your own contribution beyond the minimum; and opting out means losing your employer’s contribution too – effectively turning down part of your pay. Reviewing whether your workplace pension is on track, alongside any other pensions or savings, is exactly what our Pension & Retirement Planning service is for, rather than leaving it on autopilot.
Frequently Asked Questions
What’s the minimum workplace pension contribution?
8% of qualifying earnings in total, with at least 3% coming from the employer. Many employers pay more than this minimum.
Who is eligible for auto-enrolment?
Workers aged 22 to State Pension age, earning over £10,000 a year and working in the UK, must be automatically enrolled. Others can usually opt in.
Can employees opt out of their workplace pension?
Yes. If you opt out within one month of being enrolled, you’ll get a refund of the contributions you’ve paid. After that you can still stop contributing at any time, but anything already paid in stays in your pension. Either way, you give up the employer’s contribution, which is effectively part of your pay, and you’ll usually be re-enrolled after about three years.
What happens if an employer doesn’t comply with auto-enrolment duties?
The Pensions Regulator can issue compliance notices and fixed or escalating daily penalties for non-compliant employers.
Get Your Workplace Pension Working Properly
Whether you’re reviewing your workplace pension scheme as an employer, or trying to understand your own pension as an employee, OCM can help. Speak with OCM today about Employee Benefits, or explore our Pension & Retirement Planning service.
