What is auto-enrolment for pensions?

Full answer

**Auto-enrolment** was introduced in 2012 to address low pension saving rates. All employers must automatically enrol eligible workers into a qualifying workplace pension — employees can opt out, but are re-enrolled every 3 years. **Eligibility criteria:** | Category | Age | Earnings | Outcome | |---|---|---|---| | Eligible jobholder | 22–66 | Above £10,000/yr | **Must be auto-enrolled** | | Non-eligible jobholder | 16–21 or 66+ OR £6,240–£10,000 | — | Can opt IN | | Entitled worker | 16–75 | Below £6,240 | Can opt IN (no employer contribution required) | **Minimum contribution rates (2026/27):** | Contribution | Rate | Basis | |---|---|---| | Employee | **5%** | On qualifying earnings | | Employer | **3%** | On qualifying earnings | | **Total** | **8%** | — | **Qualifying earnings band (2026/27):** £6,240 – £50,270/year. Contributions are calculated on earnings within this band only, not total salary. **Opting out:** Workers can opt out within **1 month** of being enrolled. If they opt out in time, they receive a full refund of contributions. After 1 month, they leave the scheme but keep contributions already made. **Re-enrolment:** Every **3 years**, employers must re-enrol eligible workers who have previously opted out. Workers can opt out again immediately. **NEST (National Employment Savings Trust):** NEST is the government-backed default auto-enrolment scheme, with a legal duty to accept any employer. Many employers use commercial alternatives (e.g. Peoples Pension, Smart Pension, NOW: Pensions). **Salary sacrifice for auto-enrolment:** Many employers set up salary sacrifice arrangements — reducing employee NI by 8% on contributions and saving the employer 15% NI too. Both employee and employer can benefit.

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Related guides

• Pension Contribution Guide