The legal requirement for employers to enrol eligible employees into a workplace pension. Minimum contributions: 5% employee + 3% employer = 8% total.
How Auto-Enrolment Affects Your Payslip
Auto-enrolment requires employers to automatically enrol eligible workers into a workplace pension scheme. You are eligible if you are aged 22 to State Pension age, earn at least £10,000 per year, and work in the UK. The minimum contribution rates are 5% from the employee and 3% from the employer, calculated on qualifying earnings between £6,240 and £50,270.
On a £30,000 salary, qualifying earnings are £23,760. Your minimum contribution is £1,188/year (£99/month), and your employer adds £713/year. Thanks to tax relief, the actual cost to you is less than the headline amount.
You can opt out of auto-enrolment, but this means losing your employer contribution, which is essentially free money. Most financial advisers strongly recommend staying enrolled and contributing more if you can afford to. Use our pension calculator to see the long-term impact.
How Auto Enrolment Works in Practice
Auto-enrolment requires all UK employers to automatically enrol eligible workers into a workplace pension scheme. Minimum contributions are 8% of qualifying earnings (5% employee, 3% employer). Qualifying earnings are those between £6,240 and £50,270 per year. Employees can opt out but will be re-enrolled every 3 years.
Practical Tips
If you are aged 22-66 and earn over £10,000/year, your employer must auto-enrol you. While you can opt out, doing so means losing your employer's 3% contribution — this is essentially free money. On a £30,000 salary, the employer contributes approximately £713/year. Many employers offer more generous matching beyond the minimum 3%. Always check what your employer will match before deciding your contribution level.
Related Topics
The minimum contributions are considered insufficient for a comfortable retirement by most financial advisers, who recommend total contributions of 12-15% of salary. The earlier you start contributing above the minimum, the more time compound growth has to build your pot. See qualifying earnings for how the calculation works.
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