Auto-Enrolment Qualifying Earnings Band 2026/27: Why the First £6,240 Isn't Pensioned

The lower limit that quietly shrinks contributions

Auto-enrolment minimum contributions are not simply 8% of salary. They apply only to "qualifying earnings" — the slice of pay between £6,240 and £50,270 a year. The first £6,240 of anyone's salary is excluded from the calculation entirely, which means the effective contribution rate as a share of total salary is always lower than the headline 8% figure for anyone earning above the lower limit.

Worked example: £30,000 salary

Qualifying earnings: £30,000 − £6,240 = £23,760. Minimum total contribution at 8%: £23,760 × 8% = £1,900.80 a year, made up of at least £712.80 from the employer (3%) and the remaining £1,188 from the employee (5%), though exact splits vary by scheme design. As a proportion of the full £30,000 salary, this £1,900.80 total contribution works out at just 6.3%, not the 8% figure often quoted.

Certification: an alternative approach

Some employers choose "certification" schemes, calculating minimum contributions on total pay from the first pound rather than the qualifying earnings band. This is more generous to employees — a certified 8% scheme on £30,000 full salary would mean £2,400 total contribution rather than £1,900.80 — but it is not the legal minimum, so it is worth checking a specific scheme's basis rather than assuming the more generous method applies.

Bottom line

The £6,240 lower qualifying earnings limit means most people's actual minimum workplace pension contribution, expressed as a percentage of their full salary, is meaningfully below the widely quoted 8% figure. Checking whether an employer's scheme uses the standard qualifying earnings band or a more generous certified basis is worth doing when comparing job offers or reviewing existing pension contributions.

Sources

• The Pensions Regulator: Auto-Enrolment Contribution Rates
• GOV.UK: Workplace Pensions