If you're setting up a workplace pension for your employees, NEST is one of the pension schemes you can choose.

NEST stands for National Employment Savings Trust. It’s a workplace pension scheme established by the UK government and run by the NEST Corporation. Employers can use NEST to meet their workplace pension and automatic enrolment duties.

But choosing a pension scheme is only the first step.

Once your NEST scheme is set up, you’ll need to manage it alongside your payroll and keep it up to date as your workforce changes.

This guide walks you through how NEST works for employers and what you need to do at each stage, from setting up your scheme and enrolling employees to managing contributions and staying compliant.

Note: Pension thresholds and rules can change between tax years. The figures in this guide reflect the 2026/27 tax year, where applicable.

What is NEST?

NEST, or the National Employment Savings Trust, is a workplace pension scheme that employers can use to meet their automatic enrolment duties.

It is a defined contribution pension scheme. Employers make contributions for eligible workers, workers make their own contributions, and the money is invested to build a pension pot for retirement.

NEST is open to employers across the UK, and there is no fee for employers to set up or use the scheme. NEST does charge members through a 1.8% contribution charge on new contributions and a 0.3% annual management charge on the value of their pension pot.

For an employer, the important distinction is that NEST is the pension provider, while the employer remains responsible for meeting workplace pension duties.

Choosing NEST doesn't transfer those legal responsibilities to NEST. 

When do employers need a workplace pension?

Workplace pension duties begin when the first member of staff starts work. This is known as the employer's duties start date. Even if none of the employees initially need to be automatically enrolled, the employer still has workplace pension duties.

The first step is therefore not simply opening a NEST account. The workforce needs to be assessed to determine which employees fall into each category.

For the 2026/27 tax year, NEST classifies workers broadly as follows:

These categories are based on age and earnings, and the assessment needs to be carried out using the relevant pay-period figures rather than simply looking at an employee's annual salary. Refer the official documentation here.

For an employee who is an eligible jobholder, the automatic enrolment process generally needs to happen within six weeks of the date they become eligible, unless postponement is being used. 

What does State Pension age mean?

State Pension age is the age at which someone becomes eligible to claim their State Pension, subject to the applicable rules.

For workplace pension purposes, the distinction matters because a worker's age determines which automatic enrolment category they fall into. State Pension age is currently 66, with further increases scheduled under UK legislation.

Automatic enrolment: What it is and who it applies to

It is the process of putting eligible employees into a workplace pension scheme without requiring them to sign up themselves.

For the 2026/27 tax year, a worker generally needs to meet all of these conditions to be automatically enrolled:

• They are a worker

• They are aged at least 22 and under State Pension age

• They earn more than £10,000 a year

• They ordinarily work in the UK

NEST uses the same criteria when determining which workers need to be automatically enrolled.

How does NEST automatic enrolment work?

Once you've identified who needs to be enrolled, the process becomes much easier to understand.

1. Assess the workforce  

Assess employees based on their age and earnings to determine whether they are eligible jobholders, non-eligible jobholders, or entitled workers.

This isn't a one-time exercise. New starters and changes in earnings can affect an employee's pension category, so the workforce needs to be monitored each pay period.

2. Enrol the eligible employee into NEST

If the employee is an eligible jobholder, you'll need to enrol them into your qualifying pension scheme.

With NEST, you provide information about the worker, including details such as their name, date of birth, National Insurance number, and enrolment date. You'll also assign them to the appropriate NEST group.

NEST also gives employers several ways to enrol workers:

• Enter their details manually through the NEST online account. 

• Upload a file containing worker information.

• Exchange data through supported payroll software.

For a small business with only a handful of employees, entering the details manually may be perfectly practical. As the workforce grows, file uploads or payroll-based data exchange can reduce the amount of administration involved.

3. Give employees the required information  

Employees need to be told how automatic enrolment applies to them, including information about their pension and contributions.

You need to tell your employees in writing the following:

• The date they were enrolled

• The type of pension scheme they've been enrolled in and who runs it

• How much the employer will contribute

• How much the employee will contribute

• How they can opt out of the pension scheme

NEST provides employer notices and communication templates to help employers meet these information duties. Refer the official documentation here.

4. Start the pension deductions

Once the employee is enrolled, the employee's contribution is deducted through payroll and the employer's contribution is added separately.

This is the point where your pension setup needs to match your payroll setup. The employee's pay, pensionable earnings, contribution rate, and pay period all feed into the contribution calculation.

Cloud-based payroll software such as Zoho Payroll can take some of the manual work out of the process. You can set up NEST as your pension provider, configure your pension groups and contribution rates, and automate the calculation of employee and employer contributions as part of each pay run.

5. Submit the information and pay NEST  

The contribution information then needs to be sent to NEST and the contributions paid into the pension scheme.

The exact process depends on how you've configured your NEST and payroll setup, but the important thing is that enrolment, payroll deductions, contribution information, and payment all need to agree with one another.

5. Continue assessing employees  

A worker who isn't eligible today could become eligible later. A new employee may also meet the criteria from their first pay period.

That's why automatic enrolment is better thought of as a payroll process that continues every pay period, rather than a setup task that happens once.

Can an employer postpone NEST automatic enrolment?

Yes, employers can use postponement to delay automatic enrolment for up to three months in certain circumstances.

For example, postponement may be useful when an employer wants to align pension enrolment with a payroll cycle or when dealing with short-term or seasonal workers.

The important part is the communication. Employees must be told that postponement is being used and when they will be assessed for automatic enrolment. However, the postponement period cannot extend beyond three months from the relevant starting point.

How much does an employer have to contribute to NEST?

or eligible workers, the minimum total contribution is generally 8% of qualifying earnings. At least 3% must come from the employer, with the remaining amount normally coming from the worker. Under the minimum contribution structure, this means:

These percentages apply to the relevant earnings basis rather than necessarily to the employee's entire salary.

What are qualifying earnings?  

For the 2026/27 tax year, qualifying earnings are earnings between £6,240 and £50,270 a year.

This can include more than the basic salary. NEST lists salary or wages, overtime, bonuses, commission, statutory sick pay, statutory family leave pay, adoption pay, and holiday pay among the types of earnings that can form part of the calculation.

For example, if an employee earns £30,000 a year, the pension contribution isn't necessarily calculated on the full £30,000 when qualifying earnings are used. The calculation is based on the portion of earnings that falls within the qualifying earnings band.

NEST also allows employers to use other earnings bases, including its certification tiers or a custom earnings basis. The earnings basis chosen affects the contribution rates needed to satisfy the employer's legal duties.

So when setting up NEST, contribution rate and earnings basis are two decisions that need to be considered together.

How to set up NEST as an employer

Once NEST has been chosen as the workplace pension provider, the setup itself can be completed online.

NEST breaks the employer setup into five main tasks.

Step 1: Create a NEST employer account  

The first step is to create an online NEST account.

The account becomes the central place for setting up the scheme and handling ongoing administration. NEST sends a confirmation email after registration, and the activation link needs to be followed within 28 days.

Information needed for registration  

• Name and contact details

• Business correspondence address

• Legal business name

• PAYE reference

• Number of workers

• Details of the person responsible for the NEST account

• Details of any delegates or third-party administrators

• UK bank details or debit card details

• Payroll frequency

• Contribution rates

• Earnings basis used to calculate contributions

Step 2: Complete the five NEST setup tasks  

Once the account is created, NEST takes employers through five setup tasks:

1. Accept NEST's terms and conditions.

2. Add the organisation's details.

3. Add any delegates or third-party administrators.

4. Set up the payment source.

5. Confirm when contributions will be paid and what contribution rates will apply.

This is also where the pension administration starts connecting with payroll.

The pay period, contribution rate, and earnings basis entered during setup need to match the way payroll is actually run. If payroll is monthly, for example, the NEST setup should use the corresponding monthly pay period. NEST specifically recommends checking pay-period dates against the payroll system before completing setup.

Step 3: Choose how contributions will be calculated  

This is one of the more important parts of the setup because the choice determines how pensionable pay and contributions will be worked out.

NEST offers three broad earnings-basis options: qualifying earnings, certification tiers, and custom earnings basis.

Qualifying earnings are commonly used for automatic enrolment and apply to earnings between the relevant lower and upper limits. Certification can be used where the pension arrangement is based on different definitions of pensionable pay, while a custom basis allows an employer to specify its own contribution structure, subject to meeting the legal requirements.

Step 4: Set up how NEST will receive the money  

NEST needs a payment source for receiving pension contributions.

The current payment options include Direct Debit and debit card. NEST recommends Direct Debit as its easiest payment method.

With Direct Debit, NEST doesn't simply take money from the employer's account on a fixed date without approval. The employer first submits the contribution schedule and authorises the payment. NEST then collects the amount shown on the approved schedule.

Step 5: Set the pay period and payment due date  

NEST needs to know how frequently your employees are paid and when pension contributions should be submitted.

Supported pay-period options include monthly, weekly, tax monthly, tax weekly, fortnightly, four-weekly, and other custom time frames. Different worker groups can have different pay periods.

NEST then creates a payment schedule for each relevant worker group. The schedule records what contributions have been agreed and when they are due.

This is one place where payroll and pension setup really need to line up. A mismatch between the payroll calendar and the NEST pay period can create unnecessary reconciliation work later.

How NEST contributions are managed through payroll

Every time employees are paid, pension contributions need to be calculated and reported to NEST.

NEST requires payroll information to be sent for each pay period. This can be done manually through the online account, through a file upload, or directly through payroll software using available integrations or web services.

Using NEST with Zoho Payroll

Zoho Payroll is cloud-based payroll software that handles pay runs and tax compliance for businesses across multiple countries, including the UK. 

For UK employers, this brings PAYE, National Insurance, statutory payments, and workplace pensions into the same payroll system, so you don't have to manage them across separate tools.

Zoho Payroll also natively supports NEST. Once the configuration is set up, pension contributions are calculated as part of each pay run, and you can export pension reports to send to NEST without spreadsheets or manual data entry.

It supports the main contribution methods used with NEST, including Relief at Source, Net Pay Arrangement, and Salary Sacrifice. This means you can use the method that matches how your workplace pension is set up.

Your employees' pension eligibility can also change as their pay changes. For example, a bonus, unpaid leave, or change in working hours can affect whether someone meets the auto-enrolment thresholds. Zoho Payroll reassesses employees against these thresholds as their earnings change, helping you keep their pension status up to date.

What happens when an employee opts out of NEST?

An eligible employee can choose to opt out during the statutory opt-out period.

The NEST opt-out period lasts one calendar month and starts three working days after the worker is enrolled. Employees cannot opt out before they have been enrolled.

If an employee opts out during this period:

1. Further pension deductions must stop

2. Contributions already deducted from the employee's pay need to be refunded through payroll

3. The employer needs to keep a record of the opt-out

4. The employee's NEST membership is closed

5. The employee may need to be considered again at the next re-enrolment date

NEST says opt-out records must be kept for four years.

There is an important difference between opting out and simply stopping contributions after the opt-out period. Once the formal opt-out period has ended, an employee can stop contributions, but they won't receive the same refund associated with a valid opt-out.

What if an employee asks to join NEST?  

Automatic enrolment and the right to join are two different things. An employee who isn't eligible for automatic enrolment may still have a legal right to ask to join a workplace pension.

For example, a worker aged 16 to 74 who earns more than £6,240 but no more than £10,000 a year is generally a non-eligible jobholder. If they ask to join, the employer must enrol them and make contributions.

An entitled worker earning £6,240 or less can also ask to join, although the employer doesn't generally have to contribute for this category. Refer the official documentation here.

This is another reason not to treat automatic enrolment as a simple yes/no check. Employees who don't meet the automatic enrolment criteria can still have pension rights.

NEST re-enrolment: what happens every three years?

This is one of the easiest parts of workplace pension administration to overlook.

Every three years, employers need to reassess certain workers who have left their pension scheme and determine whether they need to be re-enrolled. The re-enrolment process generally involves:

1. Checking which eligible workers have left the pension scheme.

2. Assessing whether they meet the relevant age and earnings criteria.

3. Re-enrolling those who need to be put back into the scheme.

4. Writing to the affected employees within six weeks of the re-enrolment date.

5. Completing the re-declaration of compliance with The Pensions Regulator.

The re-declaration must be completed even if there are no employees to re-enrol. The deadline is generally within five months of the third anniversary of the employer's duties start date.

What are an employer's ongoing NEST responsibilities?

Setting up NEST is the beginning of the process rather than the end. Each pay period, employers need to:

• Assess employees where required

• Calculate pension contributions

• Deduct employee contributions from pay

• Add employer contributions

• Submit pension information to NEST

• Pay contributions by the due date

• Deal with new starters and leavers

• Process opt-ins and opt-outs

• Keep the required records

• Communicate relevant pension information to employees

The Pensions Regulator describes automatic enrolment as a continuous responsibility. Employers must continue monitoring age and earnings, maintaining contributions, managing requests to join or leave, keeping records, and carrying out re-enrolment every three years.

NEST pension employer checklist

Before going live with NEST, it helps to have the entire process mapped out rather than focusing only on account creation.

Common NEST pension mistakes employers should avoid

Setting up NEST without aligning it with payroll  

The pension scheme and payroll need to use compatible pay periods, contribution rates, and earnings definitions. A mismatch can create problems when contribution data is transferred.

Assuming every employee needs to be automatically enrolled  

Automatic enrolment depends on age and earnings. Employees who don't meet the criteria may have a right to opt in or join, but they aren't necessarily automatically enrolled.

Using the wrong earnings figure  

Pensionable pay isn't always the same as basic salary. Under qualifying earnings, overtime, bonuses, commission, holiday pay, and certain statutory payments can form part of the calculation.

Forgetting that employees need to be reassessed  

An employee's circumstances can change. Someone who wasn't eligible at one point may become eligible later, so assessment needs to continue each pay period.

Treating an opt-out as a permanent decision  

An employee who opts out isn't necessarily out of the employer's pension responsibilities forever. Certain employees need to be considered again during the three-year re-enrolment cycle.

Leaving contribution payments until the deadline  

The contribution schedule and payment need to be processed in enough time for NEST to receive the money by the due date. NEST recommends allowing sufficient time for payment processing, particularly when using Direct Debit.

Frequently asked questions

Is NEST mandatory for employers?  

NEST itself isn't mandatory. Employers can choose from qualifying workplace pension schemes that meet the automatic enrolment requirements.

What is mandatory is complying with workplace pension duties. NEST is one scheme employers can use to meet those duties.

Is NEST free for employers?  

Yes, NEST doesn't charge employers or third parties a fee to set up or use the scheme. However, employers still need to pay the required employer pension contributions and may incur costs for payroll or third-party administration.

How much does an employer have to contribute to NEST?  

For eligible workers using the minimum qualifying earnings basis, the total minimum contribution is 8% of qualifying earnings, with at least 3% paid by the employer. The employee generally contributes the remaining 5%, subject to the applicable tax relief and scheme arrangements.

What is the NEST earnings threshold for 2026/27?  

For 2026/27, the automatic enrolment earnings trigger is £10,000 a year. The qualifying earnings band is £6,240 to £50,270 a year. The corresponding pay-period thresholds need to be used when assessing employees.

Can an employee opt out of NEST?  

Yes, an employee can opt out during the statutory opt-out period, which lasts one calendar month and starts three working days after enrolment. A valid opt-out results in a refund of the employee's contributions through payroll.

Can an employee join NEST if they aren't eligible for automatic enrolment?  

Yes. Some workers who don't meet the automatic enrolment criteria have a legal right to ask to join a workplace pension. Whether the employer must contribute depends on the worker's category.

Can employers postpone NEST automatic enrolment?  

Yes. Postponement can delay automatic enrolment for up to three months in applicable circumstances. Employees need to be informed about the postponement and when they will be assessed.

How often are NEST pension contributions paid?  

Contributions are generally paid according to the pay period agreed with NEST. Employers can have different pay periods and worker groups where required, such as weekly and monthly payrolls.

Can Zoho Payroll manage NEST pension contributions?  

Zoho Payroll supports multiple pension providers (including NEST) and pension groups, pension enrolment, contribution calculations, and contribution report exports. It also supports Relief at Source, Net Pay Arrangement, and Salary Sacrifice.

Does NEST handle the employer's automatic enrolment duties?  

NEST provides the pension scheme and tools for managing enrolment and contributions, but the employer remains responsible for meeting its legal automatic enrolment duties, including assessing workers, communicating with them, making contributions, keeping records, and completing the declaration of compliance.

When does NEST re-enrolment happen?  

Employers generally need to carry out re-enrolment every three years. Eligible workers who have left the pension scheme may need to be put back into it, followed by a re-declaration of compliance with The Pensions Regulator.

How long do employers need to keep NEST opt-out records?  

NEST states that records of opt-outs must be kept for four years. Other automatic enrolment records have different retention requirements, so employers should follow the relevant TPR guidance for each record type.