How pension auto-enrolment works

All employers must offer a workplace pension scheme, even if it’s a small business. A pension helps you save money from your wages now, so you’ll have an income when you retire. 

A pension has many benefits:

• your employer will usually add extra money to your pension each month (called employer contributions)

• you usually won’t pay tax on the wages that go into a pension (but you might have to claim tax relief yourself) 

• your money is invested, so it should grow over time

• you can use your pot(s) of money to give you an income and/or tax-free lump sums when you retire.

The scheme is typically run by a separate company and will commonly be called:

• ‘defined contribution’, where you and your employer pay in a set amount each month to build up a pot of money for your retirement, or 

• ‘defined benefit, career average or final salary’, where the amount you get is based on how long you’re in the scheme and your pay. 

For more information, see our guide Workplace pensions explained.

Automatic enrolment, or auto-enrolment, simply means your employer will set up a pension for you without you needing to ask to join. 

This will happen if you’re a UK resident and: 

• usually work in the UK

• are between age 22 and the State Pension ageOpens in a new window 

• earn more than £10,000 a year or the weekly and monthly ‘earnings thresholds’

• don’t already have a suitable workplace pension.

This includes if you’re on a short-term or zero-hours contract, away on maternity, paternity, shared parental, adoption or carer’s leave or an agency pays your wages. 

If you’re self-employed or the only director and employee of a limited company, auto-enrolment doesn’t affect you. Instead, see our guide Pensions for self-employed people for help.  

The earnings thresholds for auto-enrolment in the 2024/25 tax year are:

• £192 a week

• £833 a month

• £10,000 a year 

If you earn more than the threshold, your employer should set up a workplace pension for you.

If you meet the criteria, you’re classed as an ‘eligible jobholder’ and will usually be automatically enrolled within three months. 

If you don’t qualify now, a pension might still be set up for you when you do. For example, if your income later increases or when you turn 22, provided you earn above £10,000 a year. 

If a pay rise means you qualify for auto-enrolment but it’s backdated to an earlier date, a pension should be set up when you receive the extra money. As your pay will be higher than normal, your first contribution into your pension will usually be higher than later ones. 

Even if you don’t meet the requirements for auto-enrolment, if you’re aged 16 to 74, you can always join your employer’s pension scheme voluntarily. 

If you earn over £6,240 a year (£520 a month or £120 a week), your employer will also pay into your pension as you’re classed as a ‘non-eligible jobholder’. 

If you earn less than £6,240 a year, you’re classed as an ‘entitled worker’. This means your employer might contribute to your pension, but they don’t have to. 

If you work for different employers, each one will check if you qualify to join their workplace pension scheme. They will look at your earnings with them, not your total income from all jobs.

You can have as many pension schemes as you like or you could choose to leave one or all of them

The minimum contribution is a total of 8%, usually made up of:

• 5% from your wages: 
  • 4% from you, and
  • 1% from the government in tax relief
• 3% on top from your employer. 

Our workplace pension contribution calculator will work out how much you and your employer will typically pay.  

The minimum contribution usually applies to anything you earn between £6,240 and £50,270 during the 2024/25 tax year (6 April 2024 to 5 April 2025). This is known as your ‘qualifying earnings’.

But your employer might use a different calculation based on ‘pensionable earnings’ instead. You might also be able to pay less than 5%, depending on your scheme. Your employer will be able to explain which rules apply to you.  

Your pension contributions usually include money that would normally be taken off your wages as tax. This is known as ‘tax relief’ and helps boost your retirement savings.

For example, if you contribute 5% of your wages into a pension, your employer will either:

• take 4% from your pay and your pension provider will claim the other 1% from the government (known as relief at source), or

• take 5% from your pay before tax is deducted, so you pay tax on a lower amount (known as net pay).     

You’re entitled to this ‘basic rate relief’ even if you don’t earn enough to pay Income Tax. If you pay a higher rate of tax, you can claim the extra tax relief by contacting HMRC or completing a self-assessment tax return.

For more information, see our guide Tax relief and your pension.

Most people can get tax relief on pension savings up to the amount they earn – capped at £60,000 each tax year. But your limit might be less if you earn over £200,000 or have already taken some of your pension. See our guide Annual allowance for pension savings for more information.   

You don’t have to stick to paying just the minimum amount, you can ask your employer to increase your contributions above 5%.  

Some employers might even match your contribution up to a certain limit, so this can be an easy way to boost your retirement savings.

Our Pension calculator will show you:

• how much income you’re likely to need when you retire, depending on your desired lifestyle

• the income you’re on track to get, based on your current pension pots and contributions 

• how much extra you could get by changing your contributions.

If you’re struggling to pay your pension contributions, ask your employer if they will allow you to pay a lower amount or pause your payments for a while. 

If they won’t let you, you’ll usually need to leave your scheme to stop paying in completely. This might mean you’ll have less money to live on when you retire.

Before stopping your contributions, check if you can boost your income in other ways. Start by using our Benefits calculator to check if you’re eligible for extra payments, grants and discounts. 

If you’re struggling with debt, use our  Debt advice locator  to find free debt help near you, online or on the phone. An adviser will be able to explain your options, including some you might not have heard of. 

For most people, staying in a workplace pension is a good idea. Your employer pays extra money into it, which makes up part of your overall employment package. 

If you choose to leave a workplace pension, it’s like turning down extra pay. But if you’d rather take all your wages, you can tell your employer you’d like to leave the scheme.  

If you’re looking to use the money to repay debt, talk to a free debt adviser before opting out. They’ll listen to you in confidence and explain all your options to you, which might be better than leaving your pension.

To leave your pension scheme: 

1. Ask your pension provider for an opt-out form.

2. Complete the form and give it to your employer.

If you leave within a month of your pension starting, any payments you’ve already made will be refunded. This is extended to two years if you have a defined benefit or final salary pension.

After this, your contributions might have to stay in your pension until you retire.

If you’d like to join your pension scheme at a later date, just ask your employer what you need to do. For example, some schemes will let you rejoin at any time, but others might only allow it once a year.  

From time to time, your employer is required to auto-enrol anyone who has opted out and still meets the criteria.

This means you’re likely to be auto-enrolled again within three years of opting out. You’d need to opt out again if you still wanted to leave the scheme. 

If you have any problems with your workplace pension that your employer won’t or can’t resolve, contact The Pensions Ombudsman onlineOpens in a new window or call 0800 917 4487. 

For example, if your employer:

• won't set up a pension for you, or takes more than three months to automatically enrol you

• doesn't pay contributions into your pension and you earn over £6,240 a year

• fails to deal with your complaints.

The Pensions Ombudsman will investigate your complaint and decide what needs to be done to put things right, such as being paid missed contributions. 

You can also report concerns about your workplace to the Pensions Regulator onlineOpens in a new window or by calling 0345 600 0707. 

The Pensions Regulator is responsible for workplace pensions in the UK and will look into reports about employers not following the rules, including missing payments. But you won’t be told the outcome of their investigation.