Auto-enrolment means most employees save for retirement without lifting a finger. Understanding the basics helps you decide whether to do more.
Summary
- Employers must automatically enrol eligible staff into a workplace pension.
- Minimum contributions total 8% of qualifying earnings, with at least 3% from your employer.
- Your contributions get tax relief, and employer contributions add to your pot.
- You can opt out, but you’ll usually lose your employer’s contributions.
A workplace pension is a way of saving for retirement through your job. Thanks to automatic enrolment, most UK employees are signed up by default, with money taken from their pay and added to by their employer and tax relief.
Who is enrolled automatically
Your employer must enrol you if you:
- are aged at least 22 and under State Pension age,
- earn more than £10,000 a year, and
- usually work in the UK.
If you earn less or fall outside the age range, you may still be able to join and, in some cases, receive employer contributions. Check GOV.UK for the current thresholds.
How much goes in
The minimum total contribution is 8% of your qualifying earnings, the band of earnings the minimum is based on.
| Source | Minimum share |
|---|---|
| Your employer | 3% |
| You, including tax relief | 5% |
| Total | 8% |
For the current tax year, qualifying earnings are those between £6,240 and £50,270 a year before tax. Many employers pay more than the minimum.
Top tip
Ask HR whether your employer matches extra contributions. If it does, paying in a little more can mean extra money from your employer too.
Tax relief
- Your contributions usually get tax relief, so part of what you save would otherwise have gone to tax.
- How relief is applied depends on your scheme, such as relief at source or a net pay arrangement.
- Some employers offer salary sacrifice, which can also reduce National Insurance.
Opting out
You can choose to opt out, but think carefully:
- You’ll usually lose your employer’s contributions.
- If you opt out within a month of being enrolled, you’ll normally get your own contributions back.
- Your employer will usually re-enrol you every three years, and you can choose again then.
Take care
Opting out can make a big difference to your retirement income over time. If money is tight, consider whether other costs can change first; our guide to budgeting for household bills may help.
Keeping track
- Keep a record of each scheme and provider when you change jobs.
- Update providers when you move house.
- Use the Pension Tracing Service on GOV.UK to find lost pensions.
- Free, impartial pension guidance is available through MoneyHelper and its Pension Wise service for people aged 50 and over.
The bottom line
Staying in your workplace pension means your employer and tax relief help you save. Check what you and your employer pay, consider paying more if you can, and keep track of every pot. For tax-free savings outside a pension, see our guide to ISAs.
Questions readers ask
Who is automatically enrolled?
Generally, workers aged at least 22 and under State Pension age who earn more than £10,000 a year and usually work in the UK. GOV.UK sets out the current thresholds.
Can I opt out of my workplace pension?
Yes. If you opt out within a month of being enrolled, you’ll usually get your contributions back. Your employer will normally re-enrol you every three years.
How do I find an old workplace pension?
Start with your old employer or pension provider. The government’s free Pension Tracing Service can help you find contact details.
Can I pay in more than the minimum?
Usually, yes. Some employers also match extra contributions up to a limit, so check your scheme’s rules.
This guide is general information, not financial advice. Rules, rates and allowances can change, so check the latest details with the provider, GOV.UK or the Financial Conduct Authority before making decisions. For advice on your own circumstances, speak to an FCA-authorised financial adviser.