The short answer
- You are auto-enrolled if you are 22 or over, under State Pension age, and earn over £10,000 a year.
- The minimum is 8% of qualifying earnings: at least 3% from your employer, and the rest from you.
- On £35,000, that is £191.73 a month in total, costing you £95.87 after tax relief.
- From age 30 to 68, that could build a pot of about £239,406 in today’s money.
Who is auto-enrolled
Your employer must put you into a workplace pension if you are aged 22 or over, under State Pension age, work in the UK, and earn more than £10,000 a year from that job. These thresholds are unchanged for 2026/27.
- Enrolment
- Automatic
- Employer pays
- At least 3%
- Enrolment
- You can ask to join
- Employer pays
- At least 3%
- Enrolment
- You can ask to join
- Employer pays
- Not required to pay
The Pensions (Extension of Automatic Enrolment) Act 2023 lets the government lower the age to 18 and remove the lower earnings limit, so contributions start from the first pound. These changes have not yet been brought in.
The minimum contributions
| Who | Minimum | Notes |
|---|---|---|
| Employer | 3% | Many pay more, or match what you pay |
| You | 5% | Includes 1% of basic-rate tax relief in most schemes |
| Total | 8% | Of qualifying earnings |
If your employer pays more than 3%, you can pay less than 5%, as long as the total is at least 8%. Many employers offer a matching scheme: for example, they pay 5% if you pay 5%.
Qualifying earnings or full salary
The legal minimum is based on qualifying earnings: your pay between £6,240 and £50,270 a year, including overtime, bonuses and commission. Many employers instead use your full basic salary, which means more goes in.
- Qualifying earnings: £35,000 − £6,240£28,760
- 8% of qualifying earnings£2,300.80 a year
- 8% of full salary instead£2,800 a year
A worked example
- You pay: 5% of £28,760£119.83 a month
- Your employer pays: 3%£71.90 a month
- Your cost after 20% tax relief£95.87 a month
- Pot at 68, in today's money£239,406
- Tax-free lump sum (25%)£59,851
This assumes investment growth of 4% a year above inflation after charges, and pay rising 1% a year above inflation. Over the 38 years, about £109,673 is paid in; the rest is growth.
What different salaries pay
| Salary | Qualifying earnings | You pay a year | Employer pays a year | Total |
|---|---|---|---|---|
| £12,000 | £5,760 | £288.00 | £172.80 | £460.80 |
| £25,000 | £18,760 | £938.00 | £562.80 | £1,500.80 |
| £35,000 | £28,760 | £1,438.00 | £862.80 | £2,300.80 |
| £50,270 or more | £44,030 | £2,201.50 | £1,320.90 | £3,522.40 |
Above £50,270, the legal minimum stops rising. Higher earners on the minimum may be saving a much smaller share of their pay than they realise.
How tax relief works
- How
- You pay from take-home pay; the scheme claims 20% from HMRC
- Higher rate
- Claim the extra through Self Assessment or HMRC
- Non-taxpayers
- Still get 20% relief
- How
- Taken from pay before income tax
- Higher rate
- Full relief automatically
- Non-taxpayers
- No relief through payroll
Either way, the effect for a basic-rate taxpayer is the same: £100 in your pension costs you £80. The pension tax relief calculator works out your relief at any income.
Salary sacrifice
With salary sacrifice, you give up part of your salary and your employer pays it into your pension instead. You save income tax and employee National Insurance (8% for most people), and many employers pass on some of their own 15% National Insurance saving too.
On the £1,438 a year in the example, the National Insurance saving is about £115.04 a year for you. From April 2029, the government plans to charge National Insurance on salary-sacrificed pension contributions above £2,000 a year. A lower salary can affect mortgage applications, statutory pay and some benefits, so check before you agree.
How your pot grows
Growth makes a big difference over decades, but it is not guaranteed. Most schemes put you in a default fund that invests mainly in shares while you are young and moves towards lower-risk investments as you near retirement.
Why starting early matters
| Start at | Pot at 68 |
|---|---|
| 22 | £360,690 |
| 30 | £239,406 |
| 40 | £134,011 |
| 50 | £65,810 |
Money paid in during your twenties has the longest to grow, so it often ends up worth more than money paid in later.
Paying in more
Raising your own contribution by a small amount can add a lot by retirement. In the example, going from 5% to 6% raises the pot from £239,406 to £269,332. Going to 8% raises it to £329,183.
Get the full employer match
If your employer matches extra contributions, paying enough to get the full match is like an instant return on your money. Ask your HR or payroll team what is on offer.
The cost of opting out
You can opt out within a month of being enrolled and get your contributions back. But you lose your employer’s contributions and the tax relief, and your employer will re-enrol you about every three years. In the example, opting out gives up a pot of about £239,406, of which your own money is only part.
Charges and investment choices
Default funds in auto-enrolment schemes have charges capped at 0.75% a year. A difference of 1% a year in growth, whether from charges or returns, makes a gap of £45,199 in the example. Check what your fund charges, and whether you have a choice of funds that suit your attitude to risk.
Changing jobs and old pots
- Your pension stays yours when you change jobs. Contributions stop, but the pot stays invested.
- You can usually transfer old pots into one scheme. Check for exit fees and valuable guarantees first.
- The Pension Tracing Service helps you find lost pensions from old employers.
Taking your pension
- 55, or 57 from April 2028Earliest age to take your pension
Unless you are seriously ill.
- At retirementUp to 25% tax-free
Up to a total of £268,275 for most people.
- ThenThe rest is taxed as income
Through drawdown, an annuity, or lump sums.
- From April 2027Inheritance tax
Unused pensions will count towards the estate for inheritance tax.
Is the minimum enough?
For many people, minimum contributions alone will not give the retirement income they expect. In the example, the pot could provide about £9,576 a year at a 4% withdrawal rate. Added to the full new State Pension of £12,547.60, that is about £22,100 a year before tax, in today’s money, compared with a salary of £35,000.
A common rule of thumb is to aim for a total contribution, from you and your employer together, of around half your age when you start saving, as a percentage of your pay. Starting at 30, that suggests about 15%. It is only a rough guide, but it shows why many people pay in more than the minimum, especially if they started late or want to retire before State Pension age.
The FIRE calculator works backwards from the income you want, and the State Pension age calculator shows when your State Pension starts.
Checking your payslip
Your payslip should show your pension contribution each pay period. If your scheme uses relief at source, the amount taken from your pay is 80% of your contribution, and the scheme adds the other 20% later. In the example, £95.87 comes out of your pay each month, the scheme claims £23.96 in tax relief, and your employer adds £71.90.
Your pension provider sends a yearly statement showing what has gone in and your pot’s value. Most providers also have an online account or app. If contributions are missing or late, raise it with your employer first; The Pensions Regulator can step in if an employer does not pay.
Part-time work and several jobs
Auto-enrolment is tested job by job. If you have two jobs paying £8,000 each, you will not be enrolled in either, even though you earn £16,000 in total. You can still ask to join each scheme, and your employers must pay in if you earn more than £6,240 from them.
The qualifying earnings band is also applied to each job separately, so the first £6,240 from each employer does not count. This leaves people with several part-time jobs saving less than someone earning the same from one job.
Career breaks
During statutory maternity, paternity, adoption or shared parental pay, your employer must keep paying contributions based on your normal pay, while yours are based on what you actually receive. On a longer unpaid break, contributions usually stop, but your pot stays invested.
Gaps add up over a career. If you can, consider paying a little extra before or after a break, or ask a partner whether they can contribute to a pension for you. Anyone can pay up to £2,880 a year into a pension for someone without earnings, and get basic-rate relief added to make £3,600.
Common mistakes
- Opting out to save money. You lose free money from your employer and the government.
- Missing out on a higher match. Check whether your employer pays more if you do.
- Not claiming higher-rate relief. In a relief-at-source scheme, higher-rate taxpayers must claim the extra.
- Losing track of old pots. Keep a list of every scheme and update your address when you move.
- Never checking your fund. The default fund may not suit you, and charges vary.