What is Auto-Enrolment?
Under UK law, all employers must offer a workplace pension and automatically enrol their eligible workers into the scheme.
Automatic Enrolment or ‘Auto-Enrolment’ is an initiative that was introduced by the government as part of the Pensions Act 2008, and aims to address the high number of British workers not saving enough money for their retirement. The new workplace pension law was phased in between 2012-2018, with companies of different sizes given different workplace pension staging dates. As of 2018 all companies must adhere to the new Auto-Enrolment rules and all eligible employees must be enrolled in a workplace pension scheme.
How pension Auto-Enrolment works
Rather than the old system of ‘opting-in’ to a workplace pension scheme, employees now have to ‘opt-out’ within one month from the date they’re enrolled, and if they do nothing they will automatically join the scheme. This means pension contributions will automatically be taken from your wages each time you’re paid and your employer will also have to make regular pension contributions on your behalf.
Auto-Enrolment eligibility
Full-time and part-time employees must be automatically enrolled in their workplace pension scheme if they:
- work in the UK;
- are at least 22 years old, and have not reached State Pension age;
- earn more than _money_purchase_annual_allowance a year; and
- are not already a member of a suitable workplace pension scheme.
If you earn less than _money_purchase_annual_allowance, but above _lower_earnings, your employer doesn’t have to automatically enrol you in their scheme. However, if you ask to join, your employer will be unable to refuse you and must make contributions on your behalf.
Auto-Enrolment minimum contributions
Both you and your employer have to contribute to your workplace pension - and a minimum contribution rate applies:
- employees have to pay in at least 5% of their annual ‘qualifying earnings’, which includes 1% tax relief from HMRC; and
- employers have to pay at least 3% of an employee’s annual ‘qualifying earnings’ into their pension.
Auto-Enrolment qualifying earnings are the earnings you make between _lower_earnings and a limit of £_higher_rate_threshold (_current_tax_year_yyyy_yy). It’s not yet clear whether Auto-Enrolment pension rates will continue to rise in future. However, it’s possible for both you and your employer to pay more than the minimum Auto-Enrolment rates. So you may want to consider contributing more.
Moving an Auto-Enrolment pension
When you change jobs, you’ll no longer be enrolled in your workplace pension scheme and your employer will no longer have to contribute to your pension. Depending on the rules of your scheme, you may still be able to pay into it or you can choose to move the savings you’ve built up into your next workplace or personal pension. Whatever you choose to do, you won’t be able to access the money you’ve saved until after your 55th birthday (rising to 57 from 2028).
Combining your previous auto-enrolled pensions
Instead of having several small pensions dotted around, PensionBee can help you transfer all of your old pensions into one easy-to-manage pot. Transferring your pensions will give you greater control and visibility over your retirement savings and could provide better value for money. Before transferring an Auto-Enrolment pension, you should double check that you won’t lose any guaranteed benefits or be charged a costly exit fee.
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Risk warning
As always with investments, your capital is at risk. The value of your investment can go down as well as up, and you may get back less than you invest. This information should not be regarded as financial advice.
Last edited: 06-04-2025
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