Workplace Pension Guide 2026/27 — Auto-Enrolment & Opt-Out

A workplace pension is a retirement scheme your employer sets up under automatic enrolment — eligible workers are enrolled by default and may opt out. For 2026/27 the usual minimum for a qualifying defined-contribution scheme is 8% of qualifying earnings, with at least 3% from the employer. The employee component is commonly 5%, but the amount ultimately deducted from take-home pay depends on scheme design and tax-relief method. Use the Auto-Enrolment Calculator→ for an annualised contribution and investment scenario; it is not a payroll calculation.

This guide covers the minimum rates, the qualifying-earnings band, who is auto-enrolled, opting out, re-enrolment, and how tax relief works under each payment method.

Minimum Contributions for 2026/27

The minimums have been frozen since April 2019 and are unchanged for 2026/27. Your 5% is a percentage of the scheme’s pensionable or qualifying-earnings definition, not necessarily your full salary. Under relief at source you normally pay 80% of the gross contribution and HMRC adds basic-rate relief; under a net pay arrangement the contribution is deducted before income tax; under salary sacrifice you give up salary and the employer pays the pension, with tax and National Insurance effects depending on the pay level and arrangement. The employer contribution is the headline number to check — anything above 3% is an additional employer payment, subject to the scheme rules.

What Are Qualifying Earnings?

Only earnings between £6,240 and £50,270 are pensionable for minimum contributions. If you earn £60,000, contributions are calculated on the band £50,270 − £6,240 = £44,030, not on your full salary. Qualifying earnings include salary, wages, commission, bonuses, overtime, statutory sick pay and statutory maternity, paternity and adoption pay. Earnings below the lower limit and above the upper limit are ignored for the legal minimum — though many employers base their scheme on all your salary, which is better for you.

Who Is Auto-Enrolled?

An eligible jobholder — aged 22 to State Pension age with earnings of at least £10,000 a year — must be auto-enrolled. Everyone else in the workplace is either a non-eligible jobholder who can request to join, or an entitled worker who can join without employer contributions. Your employer can usually postpone the enrolment date by up to three months, but must give the required notice and enrol you when the postponement ends if you remain eligible. It is illegal for an employer to pressure you to opt out.

How Tax Relief Is Added

Under relief at source, your payslip deduction is normally 80% of the gross contribution and the pension provider reclaims the other 20% from HMRC. Higher-rate and additional-rate taxpayers may claim further relief through Self Assessment or HMRC’s relief service. Under net pay, the contribution is taken before income tax, so relief is normally automatic through payroll. With salary sacrifice, you agree to a lower salary and the employer pays the pension; tax and NI savings depend on the amount sacrificed and the relevant thresholds. In 2026/27 the standard employee and employer NI rates are not the old 8% and 13.8% figures in every case, so do not treat a fixed percentage as guaranteed.

Worked Examples

Example 1 — £25,000 salary. Qualifying earnings are £25,000 − £6,240 = £18,760. Your 5% is £938 a year (£78.17 a month), your employer pays 3% (£562.80), and £1,500.80 goes into the pot each year.

Example 2 — £60,000 salary. Qualifying earnings are capped at £50,270 − £6,240 = £44,030, giving £2,201.50 from you and £1,320.90 from your employer — £3,522.40 a year in total.

Example 3 — Salary sacrifice. Sam earns £30,000 and sacrifices £1,500 into the pension. His taxable salary falls to £28,500. If the full sacrifice falls within the relevant basic-rate and employee-NI bands, the illustration is £300 of income-tax saving and £120 of employee-NI saving; the actual result depends on payroll thresholds and other pay. At the standard 2026/27 employer NI rate, the employer-side illustration is £225 before considering thresholds, allowances or any employer policy on sharing the saving.

These examples show contribution arithmetic, not investment growth or a guaranteed retirement income. Check the scheme’s definition of pensionable pay, the contribution timing, fund charges and investment choices. A scheme that pays more than the statutory minimum can produce a different result even when the employee’s gross salary is the same.

Opting Out and Re-Enrolment

• Opting out: you can opt out after enrolment by following the provider’s process. Opt out within one month and you get a refund of contributions; after that, contributions will usually stay in the pension until retirement.
• Re-enrolment: your employer generally must re-enrol eligible staff every three years, subject to exceptions such as opting out within the previous 12 months. You can opt out again, but treat it as a prompt to reconsider.
• Why staying in can be valuable: an eligible employer contribution and tax relief can materially increase the amount invested, but the value depends on the scheme, contribution basis, charges, investment performance and your circumstances. If you opt out, re-enrolment and later joining depend on the statutory eligibility and scheme process.
• The £60,000 annual allowance: all contributions across all your pensions are capped at £60,000 for 2026/27; most people never get close, but bonus-funded years can, and carry forward can help.

Changing Jobs and Multiple Pots

Check the scheme before changing your contribution

The statutory minimum is not necessarily the contribution level that applies to your scheme. Some employers calculate contributions on full basic pay, include overtime or match contributions above the legal minimum. Ask the provider or payroll for the pensionable-pay definition and the employer-match ceiling before reducing or increasing your contribution. Compare the percentage on the payslip with the amount that reaches the pension, because relief at source, net pay and salary sacrifice display contributions differently.

If you opt out, record the date you joined, the date the opt-out window ends and the date your employer expects to re-enrol you. Leaving the scheme may refund your own contributions within the one-month window, but it also stops the employer contribution and relevant tax relief for that period. Re-enrolment is a statutory process, not a promise that the scheme will contact you at the most convenient time, so keep your address and contact details current.

When earnings vary, review the threshold category each pay period. A bonus or overtime payment can affect the contribution for that period, while a change in age or earnings can affect eligibility. Do not assume that a contribution shown as 5% of salary is always 5% of the amount that lands in the pension. Keep the scheme booklet and the latest annual statement with your payslips.

Your workplace pension does not follow you when you move employer. You can leave the pot invested in the old scheme, transfer it to the new employer's scheme, or move it into a personal pension — and many people consolidate several pots into one SIPP for simplicity. Before transferring, check for exit penalties, guaranteed annuity rates or protected tax-free cash that an older money purchase or defined benefit scheme may carry, because those benefits can be worth more than the transfer value suggests. There is no deadline, so there is no need to rush: you can leave pots where they are and review them each year. Whatever you do, keep the records of every scheme, because the annual allowance calculation totals contributions across all of them — a job change mid-year does not reset the £60,000 limit.

Frequently Asked Questions

Estimate qualifying-earnings contributions and test selected assumptions with the Auto-Enrolment Calculator→, then read the Salary Sacrifice guide if your employer offers pension sacrifice or the Pension Annual Allowance guide for the contribution limits.

Official sources

• GOV.UK — Joining a workplace pension
• GOV.UK — What you, your employer and the government pay
• GOV.UK — Leaving your workplace pension scheme
• GOV.UK — How to enrol staff
• GOV.UK — Rates and thresholds for employers 2026 to 2027
• GOV.UK — Pension annual allowance