Automatic enrolment places a legal duty on every UK employer to put certain members of staff into a qualifying workplace pension scheme and pay into it. This article explains who must be enrolled, how much you must contribute and how contributions are worked out for the 2026 to 2027 tax year. A companion article covers postponement, opt-out, re-enrolment and compliance.
What is automatic enrolment and why does it exist?
Automatic enrolment, introduced by the Pensions Act 2008, obliges employers to enrol eligible members of staff into a workplace pension scheme and make contributions on their behalf. It was created because many people were not saving enough for retirement, and it works on inertia: staff are placed into a scheme automatically and must take active steps to leave, rather than to join. The policy is overseen by The Pensions Regulator, while the earnings thresholds sit with the Department for Work and Pensions and are published on GOV.UK. Every employer with at least one member of staff has duties, and those duties apply from the first day the first member of staff begins working for you. Automatic enrolment is not optional for the employer, although individual staff retain the right to opt out after enrolment.
Do all employers now have duties?
Yes. The staged roll-out that gradually brought existing employers into scope between 2012 and 2018 has finished, so every established employer now has live, ongoing duties rather than a future staging date. For any employer setting up for the first time, duties begin immediately on the day the first member of staff starts work, known as the duties start date, so there is no lead-in period. A brand new business that takes on its first employee must assess that person and act on the result straight away. The practical question for every employer is simply whether they are meeting their continuing legal obligations.
What are my legal duties as an employer?
Your core duties are to assess your workforce, automatically enrol any eligible members of staff into a qualifying scheme, make the minimum employer contributions, and write to your staff to tell them how automatic enrolment applies to them. You must also complete a declaration of compliance with The Pensions Regulator and keep records. Beyond set-up, you must monitor the ages and earnings of your staff each pay period and enrol anyone who becomes eligible, process opt-in or joining requests, handle opt-outs and refunds, and maintain contributions. You must not take any action whose sole or main purpose is to induce a worker to opt out or avoid enrolment, and you must not screen out job applicants on the basis of whether they are likely to opt out. These are the employer safeguards, and breaching them is a serious matter.
Who has to be automatically enrolled?
The staff you must automatically enrol are eligible jobholders. A member of staff is an eligible jobholder if they are aged at least 22 and under State Pension age, earn more than the earnings trigger of £10,000 a year (or the equivalent for the pay period), and ordinarily work in the United Kingdom. If a person meets all three tests you must enrol them and begin contributions, whether or not they ask. State Pension age is used rather than a fixed number because it changes over time and differs between individuals. Someone can move into or out of the eligible category as their age or earnings change, which is why ongoing assessment every pay period is essential.
What are the different categories of worker?
Every member of staff falls into one of three categories, determined by age and earnings in the pay period. Eligible jobholders are aged 22 to State Pension age and earn more than the £10,000 trigger; you must automatically enrol them and pay employer contributions. Non-eligible jobholders are either aged 16 to 21, or from State Pension age to 74, and earn more than the £10,000 trigger; or aged 16 to 74 and earn above the lower limit of the qualifying earnings band (£6,240) but at or below the £10,000 trigger. You do not have to enrol non-eligible jobholders automatically, but they have the right to opt in, and if they do you must enrol them and pay employer contributions as if they were eligible. Entitled workers are aged 16 to 74 and earn at or below £6,240; they have the right to join a scheme, but you are not legally required to contribute, although you may choose to. You must tell each member of staff which category applies and what their rights are.
What is the earnings trigger for 2026 to 2027?
The earnings trigger is the level of earnings at or above which an eligible jobholder must be automatically enrolled, and for 2026 to 2027 it remains £10,000 a year. It has been held at £10,000 since 2014 to 2015, and the government confirmed it stays at this level for 2026 to 2027 to provide stability. For pay periods shorter than a year the trigger is pro-rated, equating to roughly £833 a month or £192 a week, and you use the figure for the relevant pay reference period when you assess a member of staff. A person who earns above the trigger in one period but not another can move between the eligible and non-eligible categories, so the assessment must be repeated each pay run.
What is the qualifying earnings band for 2026 to 2027?
The qualifying earnings band is the slice of a worker's earnings on which minimum contributions are calculated when you use the default qualifying earnings basis. For 2026 to 2027 the lower limit is £6,240 a year and the upper limit is £50,270 a year, both unchanged. Qualifying earnings are gross earnings between these two figures, so earnings below £6,240 and above £50,270 are disregarded for the statutory minimum. They include salary, wages, commission, bonuses, overtime, and statutory payments such as sick pay and maternity, paternity and adoption pay. The upper limit of £50,270 aligns with the National Insurance Upper Earnings Limit for 2026 to 2027. As with the trigger, the band is pro-rated for shorter pay periods.
What are the minimum contributions, and who pays what?
The total minimum contribution is 8% of qualifying earnings, of which the employer must pay at least 3%, with the remaining 5% made up of the worker's own contribution together with tax relief from the government. Where the scheme uses the relief at source method, the employee pays 4% and the government adds 1% in tax relief to reach the 5%, so the figures are commonly described as 3% employer, 4% employee and 1% tax relief. The employer is free to pay more than 3%, and if the employer pays 5% or more the employee's required contribution reduces so the total still reaches at least 8%. These rates have applied since 6 April 2019, and there are no further statutory increases scheduled for 2026 to 2027. If you contribute on a basis other than qualifying earnings, different minimum percentages apply under the certification rules below.
How are contributions calculated on qualifying earnings?
On the qualifying earnings basis you calculate contributions only on the slice of pay between the lower and upper limits of the band, which for 2026 to 2027 means between £6,240 and £50,270 a year. For example, a worker earning £30,000 a year has qualifying earnings of £23,760 (£30,000 minus £6,240), and the 8% total is calculated on that £23,760, not the full £30,000. The same logic applies per pay period using the pro-rated band, so for a monthly payroll you deduct the lower limit (around £520 a month) from pensionable pay and cap it at the upper limit (around £4,189 a month) before applying the percentages. This is the default statutory basis, used by schemes such as NEST, and its advantage is certainty because the percentages and band are fixed by law and need no certification.
What are the alternative contribution bases and certification sets?
Instead of qualifying earnings, an employer may calculate contributions on a different definition of pensionable pay, but must then certify that the scheme meets one of three alternative quality standards, known as sets. Under set 1, contributions are based on basic pay (excluding bonuses, commission and overtime), with a total minimum of 9% of which at least 4% comes from the employer. Under set 2, contributions are again on basic pay but basic pay must be at least 85% of total pay across the workforce, with a total minimum of 8% of which at least 3% is from the employer. Under set 3, contributions are based on all earnings, with a total minimum of 7% of which at least 3% is from the employer. Certification is the employer signing a certificate confirming the chosen basis will at least match the qualifying earnings basis, typically valid for up to 18 months. These alternatives let employers whose payroll calculates pension on full basic salary avoid switching to the banded calculation.
What is the difference between relief at source and net pay arrangements?
These are the two methods by which income tax relief is given on employee pension contributions. Under a net pay arrangement, the contribution is deducted from gross pay before income tax is calculated, so the employee automatically gets full relief at their highest rate and no further claim is needed; the contribution reduces taxable pay in the run. Under relief at source, the contribution is deducted after tax, the scheme reclaims basic rate relief from HMRC and adds it to the pot, and higher and additional rate taxpayers claim extra relief through Self Assessment. A key consequence is that low earners who pay no income tax get effective relief under relief at source but not under a net pay arrangement, because there is no tax to relieve. You need to know which method your scheme uses to set up the deduction correctly: a relief at source scheme such as NEST takes the contribution net of basic rate relief, whereas a net pay scheme takes the full gross contribution before tax.
How does salary sacrifice work for pension contributions?
Salary sacrifice is an arrangement where the employee gives up part of their gross salary in exchange for the employer paying an equivalent amount into their pension as an employer contribution. Because the sacrificed amount is no longer paid as salary, it is not subject to income tax or National Insurance for either party, which makes it more efficient than an ordinary employee contribution; the employee saves the National Insurance they would have paid, the employer saves the secondary National Insurance, and many employers add some or all of their saving to the pension. To set this up you must vary the employee's contract to reflect the lower salary, and you must ensure the reduced salary does not fall below the National Minimum Wage or National Living Wage, because salary sacrifice cannot take pay below the legal minimum. Note that from April 2029 only the first £2,000 of pension contributions made through salary sacrifice each year will be exempt from National Insurance, with amounts above that becoming liable; this is a change to plan for but it does not affect 2026 to 2027.
For postponement, opt-out, re-enrolment and compliance, see the companion article.