Auto-Enrolment

Auto-enrolment is the UK’s mandatory workplace pension regime. Since 2012, every employer must enrol eligible workers (aged 22 to State Pension age, earning above the lower earnings limit) into a qualifying pension scheme, and pay an employer contribution on top of the employee’s. The headline minimum total contribution is 8% of qualifying earnings — split 5% employee, 3% employer.

A few mechanics that trip up new joiners:

• Qualifying earnings band: contributions are calculated on earnings between £6,240 and £50,270 (2026), not on the whole salary. Many employers operate “qualifying earnings” by default, although some use “pensionable salary” or full pay — generous setups uplift the contribution.
• Opt-out window: workers can opt out within a month and get any contributions refunded. After that, opting out forfeits any prior employer contributions (they don’t refund).
• Re-enrolment: every three years, employers must re-enrol anyone who has previously opted out. People can opt out again immediately.

Auto-enrolment pensions are usually defined-contribution (DC) — the pot value at retirement depends on what was paid in and how the investments performed. The default investment fund is typically a target-date “lifestyle” fund that de-risks as the member approaches retirement age.

Use the UK pension contribution calculator to model the all-in pot when stacking employer and employee contributions.