Learn all you need to know about workplace pensions

Based on the latest government guidance and legislation in 2025, there are five key rules for workplace pensions in the UK. 

• Automatic enrolment
  Employers must automatically enrol workers into a workplace pension if they:
  • Are aged 22 to state pension age
  • Earn at least £10,000 a year
  • Ordinarily work in the UK
• Contribution requirements
  Minimum contributions (based on qualifying earnings between £6,240 and £50,270 for 2025/26):
  • Employer – at least 3%
  • Employee – typically 5%
  • Total minimum – 8%
• Opting in and opting out
  • Employees earning below £10,000 can opt in and get employer contributions if they earn over £6.240
  • Employees can opt out within one month of being enrolled and get a refund of contributions
  • Employers must re-enrol eligible employees every three years if they’ve opted out
• Qualifying pension scheme
  The scheme must:
  • Be registered in the UK
  • Meet minimum standards set by legislation
  • Be capable of handling auto enrolment duties
• Employer duties
  Employers must
  • Assess staff eligibility
  • Enrol eligible workers
  • Make contributions
  • Provide written information to employees
  • Keep records
  • Submit a Declaration of Compliance to The Pensions Regulator within five months of their duties start date

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 still contribute
• If they earn less than £6,240, they can join voluntarily, but the employer is not required to contribute

Yes, it is illegal for a UK employer not to offer a workplace pension if they have eligible employees.

Under the Pensions Act 2008, all UK employers must:

• Automatically enrol eligible employees into a workplace pension scheme
• Make minimum contributions (currently 3% of qualifying earnings)
• Make sure the pension scheme meets legal standards set by the government

As an employer, if you don’t comply with these legal responsibilities, you:

• Are breaking the law
• May face fines (starting at £400 and rising to daily penalties of £50 to £10,000, depending on the size of the company)
• May face legal action taken by The Pensions Regulator, including court proceedings and even the disqualification of company directors in severe cases

To set up a workplace pension scheme in the UK, you must follow a series of legal and administrative steps. We’ve put together a breakdown of what’s required. 

• Know your legal duties
  Your duties begin on your duties start date, which is usually the day your first employee starts work. From that point you must:
  • Assess staff eligibility (age, earnings, UK-based)
  • Automatically enrol eligible employees
  • Make minimum contributions (3% employer, 5% employee)
• Gather required information
  To set up the scheme, you’ll need:
  • Your PAYE reference number
  • Company registration details
  • Employee information:
    • Full name
    • Date of birth
    • National Insurance number
    • Salary and pay frequency
  • Bank details for making contributions
• Choose a pension provider
  You can use a government-backed scheme or choose a private provider. You must make sure the scheme is qualifying for auto enrolment.
• Set up payroll integration
  You should make sure your payroll software:
  • Calculates contributions correctly
  • Sends data to the pension provider
  • Handles opt-ins and opt-outs
• Communicate with employees
  You must write to each employee within six weeks of enrolling them, explaining:
  • The pension scheme
  • Their rights (for example, opting out)
  • Contribution amounts
• Declare compliance
  You must submit a Declaration of Compliance to The Pensions Regulator within five months of your duties start date.

The time it takes to set up a workplace pension in the UK can vary, depending on the provider and the complexity of your business, but here’s a general breakdown:

Not all company employees are automatically eligible for a workplace pension, but most can join under certain conditions. 

Here’s how it works in the UK:

Automatically enrolled employees

You must automatically enrol an employee if they:

• Are aged 22 to state pension age
• Earn at least £10,000 a year
• Work in the UK

Employees who can opt in

Employees who aren’t automatically enrolled can still ask to join if they:

• Are aged 16-21 or state pension age to 74
• Earn between £6,240 and £10,000 a year

In these cases, you must make employer contributions to their pension. 

Employees who can join voluntarily

Employees earning less than £6,240 (2025/26 tax year) can ask to join but you do not have to make employer contributions The employee can still make personal contributions. 

People who might not be eligible

• Freelancers or contractors not on PAYE
• Non-UK workers not ordinarily working in the UK
• Directors without employment contracts (unless they employ others)

The table below shows the three different categories your employees might fall into, and what you’re responsibilities are for each. The details shown are for the 2025/26 tax year. 

Auto enrolment is a process introduced by the government to make sure employees are automatically enrolled into their employer’s workplace pension scheme. Before this was introduced, back in 2012, employees simply joined a scheme if they wanted to. The idea behind auto enrolment is that more employees will save for their retirement – although they can still opt out if they want to.

Most UK employees now need to be automatically enrolled. Both employer and employee are obliged to make a minimum contribution into their pension pots, which continues for the duration of a worker’s employment or until they take their money out of the employer’s scheme.

Key features of automatic enrolment

• Who it applies to
  Employees aged 22 to state pension age, earning £10,000 or more a year, and working in the UK
• Employer duties
  Must enrol eligible staff, contribute to their pension, and tell them in writing
• Contributions rates
  Minimum 8% total (3% employer + 5% employee) of qualifying earnings
• Scheme requirements
  Must be a qualifying pension scheme that meets legal standards set by the government

Why it matters

Automatic enrolment helps make sure more people are saving for retirement, especially those who might not otherwise join a pension scheme on their own.

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

Here are the official rules for automatic enrolment in the UK for the 2025/26 tax year, based on guidance from The Pensions Regulator and legislation set by the Department for Work and Pensions.

Who must be automatically enrolled?

An employee must be automatically enrolled if they:

• Are aged 22 to state pension age
• Earn at least £10,000 a year (or £833 a month or £192 a week)
• Ordinarily work in the UK

Here are the official employer duties for automatic enrolment in the UK as outlined by The Pensions Regulator:

• Assess your workforce
  You must identify who qualifies as a ‘worker’. You must categorise workers in one of these three categories:
  • Eligible jobholders (must be enrolled) and you must contribute
  • Non-eligible jobholders (can opt in) and you must contribute
  • Entitled words (can join voluntarily) and you do not have to contribute unless you choose otherwise
    
• Provide a qualifying pension scheme
  You must:
  • Set up or use an existing qualifying workplace pension scheme
  • Make sure your chosen pension scheme meets auto enrolment standards
• Automatically enrol eligible employees
  You must enrol employees who:
  • Are aged 22 to state pension age
  • Earn £10,000 or more a year
  • Work in the UK. You must do this by their automatic enrolment date (or deferral date if you’ve used postponement)

• Make contributions
  You must:
  • Contribute at least 3% of qualifying earnings
  • Make sure total contributions (employer plus employee) are at least 8%
    
• Communicate with employees
  You must write to each employee within six weeks of enrolling them, explaining:
  • The pension scheme
  • Their rights (for example, opting out)
  • Contribution amounts
    
• Declare compliance
  You must:
  • Submit a Declaration of Compliance to The Pensions Regulator within five months of your duties start date
  • Confirm you’ve met your legal obligations
    
• Re-enrol every three years
  You must re-assess and re-enrol eligible employees who previously opted out. 

The duties start date is the date when your legal responsibilities for automatic enrolment begin. In the UK, this is defined as the day your first employee starts working for you.

Key points

• It applies regardless of whether the employee is eligible for automatic enrolment
• You can’t change your duties start date
• From this date, you must:
  • Assess you staff for eligibility
  • Set up a qualifying workplace pension scheme (if you don’t already have one)
  • Begin making contributions for eligible employees
  • Communicate with employees about their pension rights
  • Submit a Declaration of Compliance within five months

This was the original term used to describe the date when an employer’s automatic enrolment duties began. However, this concept now only applies to businesses that employed staff before 1 October 2017. 

Staging date (pre-October 2017 employers)

It was the date assigned by The Pensions Regulator based on the size of the employer’s PAYE scheme. Larger employers had earlier staging dates (starting in 2012), and smaller ones followed in phases.

Duties start date (post-October 2017 employers)

For employer who first employed staff on or after 1 October 2017, the staging date no longer applies. Instead, their duties start date is the day their first employee starts work.

A Declaration of Compliance is a legal requirement for UK employers under the automatic enrolment rules. It’s the formal way to tell The Pensions Regulator that you’ve met your duties to set up a workplace pension and enrol eligible staff.

What it involves

You must complete the declaration online to confirm:

• You’ve assessed your workforce
• You’ve enrolled eligible employees
• You’ve set up a qualifying pension scheme
• You’re making the correct contributions

Deadline

You must submit your declaration within five months of your duties start date.

What you need

To complete the declaration, you’ll need:

• Your PAYE reference
• Your 10-digit letter code from The Pensions Regulator or accounts office reference
• Details of your pension scheme and provider
• The number of employees enrolled and postponed (if any)

It’s your responsibility

Even if someone else (like an accountant) helps you, you are legally responsible for making sure you complete your Declaration of Compliance on time. If you fail to submit it, you could face fines or enforcement action.  

You must submit your Declaration of Compliance to The Pensions Regulator within five months of your duties start date. 

This applies whether you have automatically enrolled eligible staff or postponed enrolment. You’ll still have to declare within five months of your original duties start date if you’ve postponed enrolment.

Re-declaration

You must also submit a re-declaration of compliance every three years. You must do this within five months of the third anniversary of your duties start date, even if no staff need to be re-enrolled. 

Know the law

Submitting a Declaration of Compliance is a legal requirement. If you don’t do it on time, you may face penalties or legal action by The Pensions Regulator. 

To set up automatic enrolment for your workplace pension in the UK, you can follow these key steps based on official guidance from Gov.uk.

Step-by-step guide to setting up auto enrolment

• Know your duties start date
  This is the date your first employee starts work. Your legal duties begin from this date
• Choose a pension scheme
  Select a qualifying workplace pension scheme that supports auto enrolment
• Assess your workforce
  Identify who needs to be:
  • Automatically enrolled (aged 22 to state pension age, earning £10,000 or more, and UK based)
  • Given the opportunity to opt in or join
• Set up payroll integration
  Make sure your payroll software:
  • Calculates contributions
  • Handles opt-ins, opt-outs, and re-enrolments
• Communicate with employees
  You must write to each employee within six weeks of enrolling them, explaining:
  • The pension scheme
  • Their rights (for example, opting out)
  • Contribution amounts
• Make contributions
  Minimum contributions for 2025/26 tax year:
  • Employer – 3%
  • Employee – 5%
  • Total – 8% of qualifying earnings 
• Declare compliance
  Submit a Declaration of Compliance to The Pensions Regulator within five months of your duties start date. 

In the context of workplace pensions, postponement means an employer can delay assessing and enrolling staff into a pension scheme for up to three months. This is a legal option under the UK’s automatic enrolment rules.

When can I use postponement?

You can postpone from:

• Your duties start date
• A new employee’s start date
• The date an employee first becomes eligible (for example, turns 22 or earns over £10,000 a year)

Key rules for postponement

• You can postpone for up to three months
• You must write to each affected employee within six weeks of the postponement start date
• You can postpone all or some staff, and the period can vary by employee
• You don’t need to inform The Pensions Regulator that you’re using postponement
• If an employee asks to join the pension scheme during the postponement period, you must:
  • enrol them if they’re aged 16 to 74 and earn at least £520 a month or £120 a week
  • contribute to their pension

After postponement ends

You must assess the employee immediately. If they meet the criteria (aged between 22 and state pension age, earning £10,000 or more a year, UK based), you must automatically enrol them. 

As an employer in the UK, you can postpone automatic enrolment for up to three months from specific trigger dates.

Maximum postponement period

The maximum amount of time you can postpone is three months, starting from one of these three dates:

• Your duties start date
• A new employee’s start date
• The date an employee first becomes eligible (for example, turns 22 or earns over £10,000 a year)

Key rules for postponement

• You can postpone for up to three months.
• You must write to each affected employee within six weeks of the postponement start date
• You can postpone all or some staff, and the period can vary by employee
• You don’t need to inform The Pensions Regulator that you’re using postponement
• If an employee asks to join the pension scheme during the postponement period, you must:
  • Enrol them if they’re aged 16 to 74 and each at least £520 a month or £120 a week
  • Contribute to their pension

In the UK, when a new employee becomes eligible for automatic enrolment into a workplace pension scheme, the employer must act within six weeks of the employee’s auto enrolment date.

Key points

Auto enrolment criteria

You must automatically enrol an employee if they:

• Are aged 22 to state pension age
• Earn more than £10,000 a year
• Work in the UK

Deadline

You have six weeks from the date the employee becomes eligible to:

• Enrol them into the pension scheme
• Start making contributions
• Give them written information about the scheme

Postponement option

• You can postpone auto enrolment for up to three months from:
  • The employee’s start date
  • The date they first meet the eligibility criteria
• You must tell the employee in writing if you choose to postpone.

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 employee’s pension pot a year, depending on the scheme type and provider.
3. Ongoing administration fees
   Some schemes may charge a monthly fee for each employee, 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)
   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).

Three parties typically pay into a workplace pension:

• The employer
  As an employer, you are legally required to contribute at least 3% of the employee’s qualifying earnings (between £6,240 and £50,270 for 2025/26 tax year). Some employers choose to contribute more as a benefit.
• The employee
  Employees usually contribute 5% of their qualifying earnings, with contributions automatically taken from their salary. Employees can choose to contribute more if they want to.
• The government
  The government boosts pension pots through income tax relief. So, for an employee who is a basic-rate taxpayer, tax relief means that a £100 employee contribution into their pension actually costs them £80. For higher or additional rate taxpayers, they can save even more. Depending on the type of workplace pension employees may have to claim any higher or additional tax relief through their self-assessment return.

As of the 2025/26 tax year in the UK, the minimum contribution to a workplace pension through automatic enrolment is 3% for employers. Employees must contribute 5% (which can include tax relief), making a total minimum contribution of 8% of qualifying earnings.

What counts as qualifying earnings?

For the 2025/26 tax year, qualifying earnings are an employee’s gross annual earnings between £6,240 and £50,270. This includes:

• Salary or wages
• Bonuses and commission
• Overtime
• Statutory sick pay
• Statutory maternity, paternity or adoption pay

Employers can choose to contribution more than the minimum, and in some schemes, they may cover the full 8%, meaning employees don’t have to contribute at all.

In the UK for the 2025/26 tax year, there is no upper limit on how much an employer can contributions to an employee’s pension. However, there are tax implications to think about.

Annual allowance

The total contributions that can be made into an employee’s pension without incurring a tax charge is £60,000 a year. This includes:

• Employer contributions
• Employee contributions
• Tax relief from HMRC

Tapered annual allowance

For high earners (with adjusted income over £260,000), the annual allowance may reduce to as low as £10,000.

Employer contributions

As an employer, you can contribute more than the annual allowance, but the excess will be subject to an annual allowance charge unless your employee is able to carry forward any unused allowances from previous years.

Employer contributions are usually tax deductible for your business, provided they are ‘wholly and exclusively’ for the purposes of the trade.

In the UK, under automatic enrolment rules for workplace pensions (as of the 2025/26 tax year) employees are required to contribute a minimum of 5% of their qualifying earnings.

What are ‘qualifying earnings’?

There are earnings between £6,240 and £50, 270 a year and include:

• Salary or wages
• Bonuses
• Overtime
• Statutory pay (for example, maternity pay, paternity pay, sick pay)

Tax relief is the money the government adds to an employee’s workplace pension, based on how the employer and employee pays into the pension and the employee’s tax status.

There are two main methods of adding tax relief:

1.      Relief at source (most common for workplace group personal pensions)

• The employee contributes to their pension from their net pay (after tax)
• Their pension provider claims 20% tax relief from HMRC and adds it to the pension pot
• If the employee is a higher-rate taxpayer, they can claim additional relief through their self-assessment tax return
• Example: Employee pays £80 → HMRC adds £20 → £100 goes into the pension pot
  

2.       Net pay arrangement (common in workplace occupational pensions)

• Contributions are taken from the employee’s gross pay (before tax)
• The employee automatically gets full tax relief at their highest rate
• There’s no need to claim anything back
• Example: If an employee earns £30,000 and contributes £1,000, their taxable income becomes £29,000

Why it matters

• It boosts pension savings at no extra cost to the pension owner
• It’s especially beneficial for higher-rate taxpayers
• Over time, it can significantly increase retirement income

Also called salary exchange, workplace pension salary sacrifice is a tax-efficient way for employees to contribute to their pension. It involves an agreement between the employer and employee to reduce the employee’s gross salary (before tax) by the amount they want to contribute to their pension scheme. The employer then pays that amount directly into the pension scheme on the employee’s behalf.

How it works

• An employee agrees to reduce their salary by a set amount (for example, £100 a month)
• The employer contributes that amount into the employee’s pension instead
• Because the employee’s salary is lower:
  • They pay less income tax
  • They pay less National Insurance
  • The employer also pays less National Insurance and may pass some or all of that saving back into the employee’s pension

Benefits

• It increases an employee’s take-home pay compared to standard contributions
• It boosts an employee’s pension pot (especially if the employer shares National Insurance savings)
• It’s simple and automatic once set up

Things to consider

A lower salary might affect:

• Mortgage applications
• Statutory payments (for example, maternity pay, paternity pay, sick pay)
• Life cover or other salary-based benefits

Moving a workplace pension scheme from one provider to another in the UK is a structured process that involves co-ordination between the employer, the current pension provider, and the new provider. Here’s a step-by-step overview of how it typically works: 

1.    Review your current scheme

• Understand the terms, fees and any exit charges
• Check if there are any employer-specific benefits or valuable protections, features or guarantees that transferring employees could lose

2.     Define your objectives

• Are you looking for lower fees, better investment options, improved service, or digital tools?
• Decide whether you want to replace the scheme entirely or run both schemes in parallel for a time

3.     Choose a new provider

• Compare pension providers based on:
  • Charges
  • Investment options and performance
  • Employee tools and support
  • Compliance with auto enrolment rules
  • Retirement benefit options

4.     Consult employees

• While not usually legally required, it’s good practice to tell your employees about the change and consult with them
• Give your employees clear communications on how the transfer affects them

5.     Set up the new scheme

• Work with the new provider to:
  • Set up the scheme
  • Integrate with payroll
  • Make sure it meets auto enrolment requirements

6.     Tell the old provider

• Tell your current provider of your intention to stop contributions and transfer the scheme
• Ask for a bulk transfer if moving existing funds

7.     Transfer contributions

• You can either:
  • Stop contributions to the old scheme and start afresh with the new one, or
  • Arrange a bulk transfer of existing employee funds (requires consent and regulatory compliance)

8.     Communicate with employees

• Give your employees details of the new scheme
• Provide them with information about transferring old pension pots (if applicable)
• Offer support for questions or concerns

9.     Update payroll and records

• Make sure you align your payroll with the new scheme
• Keep records of the transition for compliance and audit purposes

10.     Monitor and review

• Regularly review the new scheme’s performance and employee satisfaction

Yes, you can manage a workplace pension through payroll software. In fact, this is a common and efficient way for employers to handle pension contributions and compliance with auto enrolment duties.

What payroll software can do for pensions

1.      Auto enrolment compliance

• Automatically assess employee eligibility
• Enrol eligible employees into the pension scheme
• Generate and send statutory communications
  

2.       Calculate contributions

• Calculate employee and employer contributions based on qualifying earnings
• Apply salary sacrifice arrangements if used
  

3.      Submit data

• Submit contribution data directly to pension providers (for example, through APIs or CSV uploads)
• Integrate with providers like Nest, The People’s Pension, Aviva, and others
  

4.      Reporting and auditing

• Generate reports for compliance and auditing
• Track opt-ins, opt-outs, and re-enrolment dates
  

5.      Payslip integration

• Show pension deductions and employer contributions on employee payslips

Workplace pension re-enrolment is a legal requirement in the UK, where employers must re-assess and re-enrol certain employees into a pension scheme every three years, even if those employees previously opted out.

Why re-enrolment happens

The goal is to make sure employees who may have opted out or stopped contributions are given another opportunity to start saving for retirement.

Key points about re-enrolment

Who must be re-enrolled?

 You must re-enrol employees who:

• Are aged 22 to state pension age
• Earn over £10,000 a year
• Are not currently in a qualifying pension scheme.

Who can you exclude?

• Employee who opted out within the last 12 months
• Employees who have handed in their notice
• Employees who have protection from lifetime allowance charges

When does it happen?

• Every three years from your original staging date or duties start date
• You can choose a re-enrolment date within a six-month window (three months before or after the third anniversary)

What employers must do

• Assess the workforce to identify eligible employees
• Re-enrol those who qualify
• Write to affected employees within six weeks
• Submit a Declaration of Compliance to The Pensions Regulator within five months

Yes, they can, but there are specific rules and timelines involved.

How opting out works

Eligibility to opt out

• Only employees who have been automatically enrolled into a workplace pension can opt out
• They must do this within one month of being enrolled to get a full refund of any contributions

How to opt out

• The employee must contact the pension provider directly (not the employer)
• The provider will supply an opt-out form
• The employee completes and returns the form to the employer or the provider

Refund of contributions

• If the employee opts out within one month, the provider will refund both their and the employer’s contributions
• If they opt out after one month, the money stays in the pension pot until retirement (they can stop contributing, but they can’t withdraw it)

Re-enrolment

• Even if an employee opts out, the employer must re-enrol them every three years if they’re still eligible
• The employee can opt out again each time

When employees join or leave a workplace pension scheme in the UK, employers have specific legal duties to follow. We outline them below.

When an employee joins the pension scheme

1.     Automatic enrolment

If the employee is aged 22 to state pension age, earning over £10,000 a year and working in the UK, you must:

• automatically enrol them into your workplace pension scheme
• tell them in writing within six weeks, including information about:
  • The scheme name and provider
  • Contribution amounts for both employer and employee
  • How tax relief works
  • How to opt out if they choose

2.     If they ask to join

If an employee doesn’t meet the auto enrolment criteria but asks to join the scheme, you must:

• Enrol them if they’re aged 16 to 74
• If they earn at least £520 a month you must start making contributions
• Provide them with written confirmation of this

When an employee leaves the pension scheme

• If they opt out within one month of enrolment
  • The employee must ask the pension provider for an opt-out form
  • You must stop deductions from salary
  • You must refund all contributions (both employer and employee)
• If they opt out after one month of enrolment
  • Contributions remain in their pension pot
  • They can stop contributing but fund stay invested
  • They can’t withdraw their contributions until they retire
• If they leave the company
  • You must stop contributions from the final payroll
  • You must tell the pension provider of the employee’s departure
  • The pension pot remains with the provider unless the employee transfers it

Ongoing employer duties

You must keep accurate records of these things:

• Enrolments and opt-outs
• Contributions
• Communications with employees
• Re-enrolment of eligible employees every three years
• Submitting your Declaration of Compliance to The Pensions Regulator