Workplace pensions

Yes, if you’re an employer, you must have a workplace pension. You must automatically enrol an employee into a qualifying workplace pension if the employee:

• Works in the UK
• Is aged between 22 and state pension age
• Earns at least £10,000 a year
• Is not already in a qualifying workplace pension scheme

Key employer responsibilities

• Automatically enrol eligible employees into a qualifying pension scheme
• Contribute to the employee’s pension (minimum 3% of qualifying earnings)
• Deduct employee contributions (minimum 5% of their qualifying earnings) from their salary
• Re-enrol eligible employees every three years if they’ve opted out
• Keep records and report to The Pensions Regulator

Exceptions

• If an employee earns less than £10,000 but more than £6,240 (as of 2025/26 tax year), they can opt in, and the employer must contribute
• If they earn less than £6,240, they can join voluntarily, but the employer is not required to contribute

Automatic enrolment

This is a legal process introduced by the UK Government. It’s the legal mechanism that makes sure employees are enrolled in a workplace pension. It requires employers to:

• Automatically enrol eligible employees into a workplace pension
• Make minimum contributions
• Re-enrol employees every three years if they’ve opted out

Workplace pension

This is a broad term for any pension scheme that an employer sets up for their employees. It includes:

• Defined contribution or defined benefit schemes
• Schemes where both employer and employee contribute
• Voluntary or mandatory membership, depending on the employee’s eligibility

The typical scheme charges for a workplace pension in the UK can vary, depending on the provider and the type of scheme. The most common charges are scheme administration charges. In addition, an employer is required to make a minimum level of contributions based upon an employee's qualifying earnings.

Scheme administration charges

1. Set-up fees
   Many providers don’t charge set-up fees, especially for small employers. If charged, set-up costs can differ depending on the scheme size, the provider, and the level of support offered.
2. Annual management charge
   Usually 0.3% to 0.75% of the member's pension a year, depending on the scheme type and provider.
3. Ongoing administration fees
   Some schemes may charge a monthly fee for each member, though many modern schemes include this in the annual management charge.
   
4. Payroll integration or middleware costs
   If your payroll software doesn’t integrate directly, you might need middleware. Costs can differ depending on the number of employees.
   
5. Additional costs to consider
   Adviser or accountant fees (if you use one) and time spent by internal staff

Employer pension contributions

The cost of a workplace pension to an employer in the UK depends on the type of scheme and the employee’s earnings. For employers who are required to comply with automatic enrolment requirements, the minimum legal contribution is 3%. This is based on an employee’s qualifying earnings between £6,240 and £50,270 a year (2025/26 tax year thresholds).