How Much Pension Does My Employer Pay?

Auto-enrolment is a legal obligation, not an optional benefit. Under The Pensions Regulator (TPR) rules, every employer with at least one worker must:

1. Assess each worker against the eligibility criteria on their automatic enrolment date or postponement date.
2. Enrol eligible jobholders into a qualifying pension scheme.
3. Contribute at least the minimum employer percentage.
4. Re-enrol eligible workers who opted out, roughly every three years.
5. Keep records and complete a re-declaration of compliance with TPR.

Failing to comply can result in fixed-penalty and escalating daily-penalty notices from TPR. The employer cannot encourage or induce a worker to opt out.

Workers fall into three categories for auto-enrolment purposes:

The £10,000 trigger and the £6,240 lower limit of qualifying earnings are reviewed annually by the DWP. For 2026/27 these thresholds remain at £10,000 and £6,240 respectively.

Agency workers, zero-hours contract workers and people on short-term contracts can all be eligible jobholders if their earnings reach the trigger. Postponement allows employers to defer assessment by up to three months, but the duty to enrol and backdate contributions cannot be permanently avoided.

The legal minimum total contribution is 8% of qualifying earnings, split as follows:

These are minimums. Many employers contribute more than 3%, particularly in the public sector, professional services and to attract experienced hires. Increasing the employer rate is one of the most tax-efficient ways to improve a pay package because employer pension contributions are exempt from employer NI. Use the [employee cost calculator](/employee-cost-calculator/) to see how pension affects total employment cost.

The employee contribution benefits from income tax relief. Under a net-pay scheme, relief is automatic at the marginal rate. Under relief-at-source, the scheme claims 20% basic-rate relief and higher-rate taxpayers claim the rest through Self Assessment.

The minimum contribution percentages apply to a pensionable pay base. Employers choose one of several certification sets, but the two most common are:

Qualifying earnings — contributions are calculated on gross pay between the lower limit (£6,240) and the upper limit (£50,270). On a £30,000 salary, pensionable pay is £23,760. At 3% employer and 5% employee, total contributions are £1,900.80 a year.

Total earnings (Set 3) — contributions are calculated on all gross pay from the first pound. On a £30,000 salary, pensionable pay is £30,000. At 3% employer and 5% employee, total contributions are £2,400.00.

The total-earnings approach is simpler to explain to staff and produces higher contributions for the same percentage, but it costs the employer more. Try both options in the [workplace pension calculator](/workplace-pension-calculator/) to compare the annual difference.

Salary exchange (also called salary sacrifice for pension) is an arrangement where the employee gives up part of gross salary and the employer pays that amount into the pension instead. Because the exchanged amount is no longer salary, neither employer nor employee pays National Insurance on it.

On a £30,000 salary with 5% salary exchange:

The employer NI saving is a real cost reduction. Some employers pass part or all of it into the pension as an employer NI top-up, further increasing the employee's retirement fund. See the [salary sacrifice pension calculator](/salary-sacrifice-pension-calculator/) for a detailed breakdown and the [salary sacrifice pension guide](/guides/salary-sacrifice-pension-guide/) for implementation considerations.

Employers must re-enrol eligible jobholders who previously opted out, approximately every three years from the staging date. TPR sets a re-enrolment window: from three months before to three months after the third anniversary of the staging date (or the previous re-enrolment date).

The employer must:

1. Pick a re-enrolment date within the allowed window.
2. Assess all workers again on that date.
3. Re-enrol anyone who qualifies as an eligible jobholder and is not already an active member.
4. Complete a re-declaration of compliance with TPR within five months.

Workers who are re-enrolled can opt out again within one month. Re-enrolment is a legal obligation, not a courtesy reminder. Missing the window or the re-declaration can trigger TPR enforcement.

An eligible jobholder can opt out within one calendar month of the enrolment date (or the date the enrolment information is provided, if later). If they opt out within this window, all contributions made during the opt-out period are refunded and the worker is treated as if they were never enrolled.

After the opt-out window closes, the worker can leave the scheme, but contributions already paid are not refunded. They become deferred pension rights subject to scheme rules.

Employers must not encourage, induce or coerce a worker into opting out. This includes adjusting job offers, bonuses or other terms to discourage pension membership. TPR can investigate and penalise such conduct.

Multiple jobs — each employment is assessed independently. A worker earning £7,000 from two different employers is not an eligible jobholder for either (below £10,000 each), even though combined earnings exceed the trigger. However, each employer must still offer enrolment if the worker asks as a non-eligible jobholder.

Zero-hours contracts — the worker can still be an eligible jobholder. Assess earnings in each pay period using the appropriate pay reference period. If earnings in a pay period, annualised, exceed £10,000, the auto-enrolment duty applies. Postponement by up to three months is allowed.

Maternity and family leave — employer pension contributions must continue on any contractual pay above statutory minimums during ordinary maternity leave. During unpaid additional maternity leave, the employer is not required to continue contributions, but must re-enrol the worker on return if they are still eligible. Shared parental leave follows similar principles.

Apprentices under 22 — they are non-eligible jobholders even if earning above £10,000. They have the right to opt in, and the employer must contribute if they do.

Start by assessing every worker on their enrolment date. Use the qualifying earnings band or total earnings approach and apply at least the 2026/27 minimum rates. Document whether the scheme uses net pay or relief at source for employee contributions. Consider salary exchange to generate NI savings for both parties.

Run the [workplace pension calculator](/workplace-pension-calculator/) to model employer and employee amounts at different salaries, and the [employer NI calculator](/employer-ni-calculator/) to see how pension changes affect total NI liability. Track re-enrolment dates and complete the re-declaration on time. Keep enrolment letters, opt-out notices and contribution records for at least six years.