Key facts
- Minimum total contribution is 8% of qualifying earnings (£6,240 to £50,270), at least 3% employer and 5% employee
- A £35,000 earner gets £2,301 a year in the pension for a net cost of just £1,150 once tax relief and employer money are counted
- You are auto-enrolled if aged 22 to State Pension age and earn over £10,000 from one employer
- Each job is assessed separately, so you can be enrolled in more than one workplace pension
The most tax-efficient way to pay in more is often salary sacrifice guide, and your contributions then compound over decades as shown in compound interest guide.
| Salary | Qualifying earnings | Employer (3%) | Employee (5%) | Total (8%) |
|---|---|---|---|---|
| £20,000 | £13,760 | £413 | £688 | £1,101 |
| £30,000 | £23,760 | £713 | £1,188 | £1,901 |
| £35,000 | £28,760 | £863 | £1,438 | £2,301 |
| £50,270 or more | £44,030 | £1,321 | £2,202 | £3,522 |
Contributions apply only to qualifying earnings between £6,240 and £50,270, not your whole salary. Source: WhatsUK calculation, 2026/27, 16 June 2026.
The employer share is the reason opting out rarely makes sense. Take a £35,000 earner: their own contribution is 5% of qualifying earnings, or £1,438, but only £1,150 of that comes out of net pay because the other £288 is tax relief. Add the employer's £863 and £2,301 a year goes into the pension for a net cost of just £1,150. Opting out throws away that employer money and the tax relief.
See exactly where the deduction appears on your wage slip in how to read your payslip guide, and explore all our tools on the calculators directory page.
Since 2012, UK employers have been required to automatically enrol eligible workers into a workplace pension scheme and make contributions on their behalf. In 2026/27, 88.3% of eligible UK employees are enrolled, up from 47% before auto-enrolment began. The system has created a pension-saving culture for a generation that might not have saved otherwise. But the minimum contribution levels are widely considered insufficient for a comfortable retirement, and most workers are contributing only the legal minimum.
Who gets auto-enrolled
| Criterion | Requirement for auto-enrolment |
|---|---|
| Age | Between 22 and state pension age (currently 66) |
| Earnings | Above £10,000 per year from a single employer |
| Employment status | Worker (including part-time, agency workers, zero-hours) |
Workers earning between £6,240 and £10,000 are not auto-enrolled but have the right to opt in (and receive employer contributions). Workers earning below £6,240 can join voluntarily but the employer is not required to contribute.
Minimum contribution rates for 2026/27
| Contribution | Minimum rate | What it applies to |
|---|---|---|
| Employee contribution | 5% | On qualifying earnings |
| Employer contribution | 3% | On qualifying earnings |
| Total minimum | 8% | Combined |
Qualifying earnings band for 2026/27: £6,240 to £50,270 per year.
Example: £30,000 salary
Qualifying earnings = £30,000 − £6,240 = £23,760
Employee 5% contribution = £1,188 per year (£99/month)
Employer 3% contribution = £713 per year (£59.42/month)
Total pension contribution = £1,901 per year
The qualifying earnings trap
Many employees assume their pension is calculated on their full salary. This is not always true.
| Scheme type | Pensionable pay | Employee contribution at 5% on £30,000 |
|---|---|---|
| Qualifying earnings | £6,240 to £50,270 | £1,188/year (on £23,760) |
| Basic pay (total pay) | Full salary | £1,500/year (on £30,000) |
Some employers use total pay schemes or enhanced schemes that calculate on a higher pensionable earnings figure. Check your pension scheme documentation or ask HR.
What happens if you opt out
You can opt out of auto-enrolment within one month of being enrolled. If you do, you lose the employer contribution, which represents an immediate pay cut of 3% of your qualifying earnings. An employee on £30,000 who opts out loses approximately £713 per year in employer contributions: money they would have received for free.
Opting out also loses the tax relief. A basic rate taxpayer contributing £99/month has only paid £79.20 from their net pay (HMRC adds £19.80). The effective cost of the £1,188 annual pension contribution is approximately £950.
There are few rational reasons to opt out of auto-enrolment unless you are in severe short-term financial difficulty. Even then, financial advisers typically recommend maintaining at minimum a level sufficient to claim the full employer match.
Expert Tip
Many employers offer "enhanced matching" where they will increase their employer contribution if you increase yours. For example, an employer might contribute 3% on the minimum, but 5% if you contribute 6%, and 7% if you contribute 8%. If your employer offers enhanced matching, increasing your contributions to the level that triggers maximum employer contributions is one of the highest-return financial decisions available. A guaranteed, immediate 40% to 100% return on additional pension contributions (from employer matching) is unmatched by any other savings vehicle.The 30-year impact of contributing 5% vs 10%
Using a starting salary of £30,000, 2% annual salary growth, and 6% annual investment return (net of fees):
| Employee contribution | Employer contribution | Total % | Pension pot at 65 (starting at 35) |
|---|---|---|---|
| 5% (minimum) | 3% | 8% | Approximately £280,000 |
| 8% (enhanced) | 5% | 13% | Approximately £455,000 |
| 10% | 3% | 13% | Approximately £455,000 |
| 15% | 3% | 18% | Approximately £632,000 |
These estimates assume 30 years of saving from age 35 to 65 with no breaks. Actual outcomes depend on investment performance, fund choices, and charges.
Pension Calculator
Model your personal pension pot at retirement based on your contributions and timeline.
Salary sacrifice: the tax-efficient way to contribute more
Most employers allow pension contributions via salary sacrifice, where your gross pay is reduced by the contribution amount before tax and NI are calculated. This means you save both income tax and NI on the contribution.
Basic rate employee contributing an extra £100/month via salary sacrifice:
Tax saved: £20 (20% income tax)
NI saved: £8 (8% NI)
Real cost to you: £72 for a £100 pension contribution
Return from day one: 39% (£100 pension value from £72 net cost)
Salary Sacrifice Calculator
Calculate your exact savings from salary sacrifice pension contributions.
Understanding your pension statement
Your pension provider sends an annual statement showing:
- Current fund value
- Projected fund value at retirement (at current contribution levels)
- Fund performance over the past year
- Annual management charge (AMC or total expense ratio)
Pay attention to the annual management charge. An AMC of 1% versus 0.3% on a £100,000 pot costs you approximately £700 more per year in fees. Over 20 years, this compounds into a significant difference in final pot size. If your default pension fund charges more than 0.5% annually, ask whether lower-cost index funds are available within your scheme.
State pension and auto-enrolment
The full new state pension for 2026/27 is £241.30 per week (£12,547.60 per year). Auto-enrolled workplace pension savings are designed to supplement this, not replace it. See our State Pension UK guide for qualifying years, State Pension age, and how to check your forecast.
The government projects that workers on median earnings need a replacement income of approximately 70% of their working salary in retirement. At a median UK salary of £34,000, that is approximately £23,800 per year.
The state pension covers £12,548. Workplace and personal pensions need to cover the remaining £11,252.
At a 3.5% drawdown rate, this requires a pension pot of approximately £351,000 at retirement.
Most people on minimum auto-enrolment contributions are well short of this target.
Pensions and Inheritance Tax from April 2027
From April 2027, unspent pension funds will be included in your estate for Inheritance Tax purposes. Currently, pensions sit outside your estate and can be passed on tax-free (if you die before 75) or at the recipient's marginal income tax rate (if after 75). The 2027 change means large pension pots could face a 40% IHT charge on top of income tax on withdrawals by beneficiaries. This significantly changes the case for drawing down pension funds rather than preserving them indefinitely.Related Calculators
Frequently Asked Questions
You are automatically enrolled if you are aged between 22 and State Pension age, earn more than £10,000 a year, and work in the UK. If you are 16 to 21 or above State Pension age up to 74 and earn over £6,240, you can opt in and still get an employer contribution. Those earning under £6,240 can join but the employer need not contribute.
Yes, each job is assessed separately. If you earn over £10,000 in one job you are auto-enrolled there, and each employer that enrols you must contribute. In a second job earning between £6,240 and £10,000 you are not enrolled automatically but can opt in and still receive an employer contribution.
A total of 8% of qualifying earnings, split between at least 5% employee contribution and at least 3% employer contribution. Qualifying earnings are between £6,240 and £50,270 per year.
No. The 3% employer minimum is a legal requirement under auto-enrolment legislation. Employers who fail to meet this are in breach of The Pensions Regulator requirements.
You lose the employer contribution, which is a permanent reduction in your total compensation. HMRC also re-enrols you every three years, after which you can opt out again if you choose.
For 2026/27, the band is £6,240 to £50,270. Pension contributions are calculated on earnings within this band, not on total salary. Many schemes with total-pay calculations produce higher contributions.
At minimum, enough to claim your employer's full match. For longer-term retirement adequacy, most independent financial advisers recommend targeting total contributions of at least 12% to 15% of salary.
Yes. You can contribute to both simultaneously. Total pension contributions across all schemes cannot exceed £60,000 per year or your annual earnings, whichever is lower (the annual allowance).
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James Hartley is a Chartered Management Accountant (CIMA) with more than eight years of experience in UK tax, payroll and compliance. He holds a BSc in Finance and Economics from the University of Manchester and spent his early career at a Big 4 accounting firm. He founded WhatsUK to build free UK financial calculators and guides verified against official HMRC sources. He authors every calculator and article on WhatsUK.
Sources & Official References
- The Pensions Regulator- Auto-enrolment guidance
- GOV.UK- Workplace pensions
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Disclaimer: This calculator provides estimates based on standard HMRC rates for 2026/27. Results may vary based on individual circumstances. This is not financial advice. Always consult a qualified accountant or CIMA-qualified financial adviser for personal tax matters.