Guide · 4 minute read · Updated 10 Jul 2026

Workplace pensions and auto-enrolment: how do they work?

Since 2012, employers have had to automatically put eligible workers into a workplace pension and pay into it. You are enrolled by default, money comes off your pay, your employer adds more, and the government chips in tax relief. Opting out feels like a pay rise, but it is really turning down free money.

Who gets auto-enrolled

Your employer must automatically enrol you if you meet all three tests in 2026/27: you are aged between 22 and State Pension age, you earn more than £10,000 a year from that job, and you usually work in the UK. Hit those and enrolment happens without you doing anything.

If you fall outside the criteria, you are not left out entirely. Workers who earn less or are under 22 (down to age 16) can ask to opt in, and if you earn above the lower earnings limit of £6,240 your employer still has to contribute when you do. Each job is assessed separately, so someone with two part-time jobs might be enrolled in one and not the other.

The 8% minimum, and who pays what

The legal minimum total contribution is 8% of your qualifying earnings. That 8% is split: your employer must put in at least 3%, and you make up the rest, normally 5%, of which part is tax relief from the government. So of that 5%, a basic-rate taxpayer effectively pays 4% and the taxman adds 1%.

"Qualifying earnings" matters here, because the 8% is not charged on your whole salary. In 2026/27 it applies only to earnings between £6,240 and £50,270. So on a £30,000 salary, contributions are based on £30,000 minus £6,240, which is £23,760. Eight percent of that is about £1,900 a year going into your pension, of which your employer provides roughly £713. Many employers are more generous than the minimum, so check your own scheme.

Why opting out is throwing money away

You can opt out, and payroll will refund recent contributions if you do it within the opt-out window (usually a month). But pause before you do. Opting out does not just stop your own contributions; it forfeits your employer's 3% and the tax relief too. That is the part people miss.

On the £30,000 example, opting out to keep your own roughly £950 a year in your pocket also hands back around £713 of employer money and the tax relief on top, every year, plus decades of investment growth on all of it. Very few things offer an instant uplift like an employer match, so unless you genuinely cannot afford the contribution, staying in is almost always the right call. Our guide on increasing pension contributions shows what paying in more than the minimum does over time.

If you opted out, how to get back in

Changed your mind? You can opt back in at any time by writing to your employer, and they must put you into the scheme and start contributing again (they are required to accept this at least once a year). Even if you never actively rejoin, your employer must re-enrol you automatically roughly every three years, precisely because so many people opt out and later regret it. When that re-enrolment letter lands, treat it as a nudge to stay in rather than an annoyance to opt out of again.

Common questions

Who has to be auto-enrolled into a workplace pension?

In 2026/27, workers aged 22 to State Pension age who earn over £10,000 a year and work in the UK must be automatically enrolled. Younger or lower-earning staff can usually ask to opt in, and employers must contribute for anyone earning above £6,240.

How much goes into an auto-enrolment pension?

The minimum total is 8% of your qualifying earnings (the slice between £6,240 and £50,270 in 2026/27). Your employer pays at least 3%, and you pay the rest, normally 5% including tax relief. Many employers pay more than the 3% minimum.

Should I opt out of my workplace pension?

Usually no. Opting out saves your own contribution but throws away the employer's 3% and the government's tax relief, which is free money you cannot get any other way, plus years of growth on it. Only consider it if you genuinely cannot afford to contribute.

Can I rejoin after opting out?

Yes. You can ask your employer to opt you back in at any time and they must accept at least once a year. Even if you do nothing, your employer has to re-enrol you automatically about every three years, so you get regular chances to restart.

Guidance and education, not regulated financial advice.