Workplace pension UK: employer duties, minimum contributions and key deadlines

One of your employees is 28, earning £24,000 a year. Retirement feels abstract to them. But the money going into their pension today, including your contribution as their employer, is quietly compounding in the background. In 37 years, that matters considerably.

What is a workplace pension?  

A workplace pension is a pension scheme arranged by the employer, into which both the employer and employee make contributions. Under the Pensions Act 2008, every UK employer must enrol eligible staff into a qualifying pension scheme and contribute to it. This is called automatic enrolment. If you employ at least one person, you have duties.

What about the state pension? The state pension and the workplace pension are two separate things. The state pension is paid by the government when an employee reaches retirement age, funded through their National Insurance (NI) contributions over their working life. In 2026/27, the full new state pension is £241.30 per week, enough to live on modestly, but not enough for most people to retire comfortably on alone. The workplace pension is what sits on top of it. As an employer, you have no role in the state pension. Your legal duty is the workplace pension.

Let's try to understand workplace pension and employer duties better with this article.

Auto enrolment: the basics

Auto enrolment is the process by which employers are required to automatically enrol eligible employees into a qualifying workplace pension scheme, without the employee having to ask or apply. The employee can choose to opt out, but the default is enrolment.

The system was introduced in 2012 and has been widely credited with reversing decades of decline in workplace pension saving. Since its introduction, membership of defined contribution occupational pension schemes increased from 0.9 million in 2011 to 10.6 million in 2019.

Your auto enrolment duties begin on the day your first member of staff starts work. This is called your duties start date. Even if you believe none of your staff will qualify for auto enrolment, you still have duties to assess your workers and keep records.

Who must be automatically enrolled?

Not every worker must be auto enrolled. The rules divide workers into three categories based on age and earnings:

Eligible jobholders (must be automatically enrolled)  

Workers who:

• Are aged 22 to State Pension age

• Earn above the earnings trigger (£10,000 per year in 2026/27)

• Work in the UK

These workers must be automatically enrolled without being asked.

Non-eligible jobholders (have the right to opt in)  

Workers who:

• Are aged 16 to 21, or State Pension age to 74

• Earn above £10,000 per year

OR

• Are aged 16 to 74

• Earn between £6,240 and £10,000 per year

These workers are not automatically enrolled, but if they ask to join, the employer must enrol them and pay contributions.

Entitled workers (have the right to join, no employer contribution required)  

Workers who:

• Are aged 16 to 74

• Earn below £6,240 per year

These workers can request to join a pension scheme, but the employer is not required to contribute.

Auto enrolment thresholds and minimum contribution rates

The Department for Work and Pensions reviews thresholds annually. For 2026/27, they are unchanged from 2025/26:

Qualifying earnings are calculated on the band between the lower and upper levels. Contributions are not paid on every pound earned only on earnings within this band.

Minimum contribution rates  

The minimum total contribution into a workplace pension scheme is 8% of qualifying earnings, split between employer and employee:

• These minimums have been in place since April 2019 and have not changed since.

• The employee's 5% includes tax relief at source, meaning the actual amount deducted from their net pay is typically lower (depending on how the scheme is structured).

• You can choose to contribute more than the 3% minimum, and many employers do. A higher employer contribution is increasingly used as a recruitment and retention tool, particularly for professional roles.

How qualifying earnings are calculated 

Qualifying earnings are the portion of the employee's pay on which contributions are calculated. They are not based on total gross pay they are based on earnings within the band between £6,240 and £50,270 per year.

A worked example:

An employee earns £24,000 per year.

Qualifying earnings = £24,000 - £6,240 = £17,760

Employer contribution (3%) = £17,760 x 3% = £532.80 per year (£44.40 per month)

Employee contribution (5%) = £17,760 x 5% = £888 per year (£74 per month)

Total pension contribution = £1,420.80 per year

Choosing a pension scheme 

As an employer, you must choose a qualifying pension scheme that meets the legal requirements set by The Pensions Regulator. You cannot use a scheme that does not qualify, even if your employees agree to it.

A qualifying scheme must:

• Meet the minimum contribution requirements

• Be registered with HMRC

• Pass relevant quality tests set by The Pensions Regulator

If you do not have an existing scheme, NEST (National Employment Savings Trust) is the government-backed scheme available to all employers with no eligibility restrictions. 

You are not required to use NEST, but it is often the simplest starting point for smaller employers.

Note: Zoho Payroll integrates with NEST for workplace pension, handling worker assessments, contribution calculations, and pension payment submissions automatically as part of your regular payroll run.

What employers must do and when 

Here is a summary of your key obligations as an employer:

Assess your workforce  

From your duties start date, you must assess all workers to determine which category they fall into (eligible jobholder, non-eligible jobholder, or entitled worker). This assessment must be carried out every time you run payroll.

Automatically enrol eligible workers  

Eligible jobholders must be enrolled within the enrolment window (the six-week period beginning on the date they become eligible). You can choose to postpone enrolment by up to three months using a postponement notice.

Write to your workers  

You must write to each worker explaining their auto enrolment status, whether they have been enrolled, and their right to opt in or opt out. This must be done within six weeks of their enrolment date or assessment date.

Pay contributions on time  

Employer and employee contributions must be paid to the pension scheme by the 22nd of the month following the month in which the payroll was run. Contributions must not be deducted from employees' pay before they are due.

Declare your compliance  

You must complete a Declaration of Compliance with The Pensions Regulator within five months of your duties start date. This confirms that you have met your legal obligations.

Re-enrolment: the three-year duty 

Auto enrolment does not end at the point of initial enrolment. Every three years, you must re-enrol any eligible workers who have previously opted out or who have stopped contributing to the scheme. This is called re-enrolment.

The re-enrolment date is chosen by the employer within a three-month window either side of the third anniversary of the original staging date or previous re-enrolment date. Workers who are re-enrolled have the same right to opt out again.

You must also submit a new Declaration of Compliance to The Pensions Regulator after each re-enrolment.

Opting out: what happens 

• Employees have the right to opt out of the workplace pension scheme within one month of being enrolled. If they opt out within this window, any contributions deducted from their pay must be refunded.

• After the opt-out window closes, employees can still choose to leave the scheme, but contributions already made are not refunded they remain in the pension pot.

• As an employer, you cannot encourage or induce employees to opt out. Doing so is a criminal offence under the Pensions Act 2008.

• Workers who have opted out will be automatically re-enrolled every three years, at which point they can choose to opt out again.

Penalties for non-compliance 

The Pensions Regulator takes a graduated approach to enforcement. Non-compliance typically follows this sequence:

1. Compliance notice: The Pensions Regulator issues a notice requiring the employer to take specific action by a set deadline.

2. Fixed penalty notice (£400): Issued if the employer fails to comply with a statutory notice or breaches the law. This is a flat-rate penalty.

3. Escalating penalty notice: Issued for continued non-compliance. Fines accrue daily at a rate of £50 to £10,000 per day, depending on the number of staff, until the employer complies.

4. Civil penalty for unpaid contributions: If an employer fails to pay contributions that are due, The Pensions Regulator can issue a civil penalty of up to £5,000 for individuals and up to £50,000 for organisations.

5. Prohibited recruitment conduct penalty: If an employer induces or attempts to induce a worker to opt out, a separate penalty of £1,000 to £5,000 applies depending on the number of staff.

The Pensions Regulator monitors compliance using data from HMRC's RTI system. Employers who fail to declare compliance receive automatic notices and, if unresolved, face enforcement action.

The way forward 

Workplace pension duties are ongoing, not a one-off task. The checklist below covers the key obligations for employers at every stage.

Checklist:

• Identify your duties start date (the day your first employee started work)

• Assess all workers at every payroll run to determine their enrolment category

• Automatically enrol all eligible jobholders within the enrolment window

• Choose a qualifying pension scheme that meets The Pensions Regulator's requirements

• Write to all workers explaining their auto enrolment status within six weeks

• Pay minimum contributions of at least 3% (employer) on qualifying earnings between £6,240 and £50,270

• Pay contributions to the scheme by the 22nd of the following month

• Submit your Declaration of Compliance within five months of your duties start date

• Diarise your re-enrolment date (every three years) and submit a new Declaration of Compliance

Note: Zoho Payroll supports workplace pension management, including worker assessment, contribution calculations, and integration with pension providers, so your auto enrolment duties are handled accurately every pay run.

About Zoho Payroll 

Zoho Payroll is part of Zoho's suite of 55+ integrated business applications, trusted by over 150 million users across 150+ countries. As payroll software for employers in the UK, Zoho Payroll handles PAYE calculations, National Insurance contributions, workplace pension contributions, and RTI submissions to HMRC, so your payroll and pension obligations are met accurately every time.

Frequently Asked Questions

• What is a workplace pension?

A workplace pension is a pension scheme arranged by the employer, into which both the employer and employee make contributions. Under the Pensions Act 2008, all UK employers must automatically enrol eligible staff into a qualifying scheme and contribute to it. This applies regardless of how many employees you have.

• What is auto enrolment?

Auto enrolment is the legal requirement for employers to automatically enrol eligible workers into a workplace pension scheme. Workers aged 22 to State Pension age who earn above £10,000 per year must be enrolled without being asked. They can choose to opt out, but the default is enrolment.

• What are the minimum pension contributions for 2026/27?

The minimum total contribution is 8% of qualifying earnings. Employers must contribute at least 3% and employees (including tax relief) contribute at least 5%. Qualifying earnings are calculated on the band between £6,240 and £50,270 per year.

• What are qualifying earnings?

Qualifying earnings are the portion of an employee's pay on which pension contributions are calculated. They are earnings between the lower qualifying earnings limit (£6,240 per year) and the upper limit (£50,270 per year). Contributions are not paid on every pound earned.

• Can an employee opt out of the workplace pension?

Yes. Employees can opt out within one month of being enrolled, in which case any contributions already deducted are refunded. After the opt-out window, they can leave the scheme but contributions already made are not returned. Employers cannot encourage employees to opt out.

• What is re-enrolment?

Re-enrolment is the duty to automatically re-enrol any workers who previously opted out, every three years. Employers choose a re-enrolment date within a three-month window around the third anniversary of their original staging date. Workers can opt out again after re-enrolment.

• What happens if I don't comply with auto enrolment?

The Pensions Regulator can issue a fixed penalty of £400 for failure to enrol eligible workers, followed by escalating daily penalties of £50 to £10,000 per day depending on employer size. Inducing employees to opt out is a criminal offence and can attract a civil penalty of up to £50,000 for companies.

• Does the state pension count towards auto enrolment contributions?

No. The state pension (£241.30 per week in 2026/27) is funded through National Insurance contributions, not workplace pension contributions. The two systems are entirely separate. The state pension provides a baseline; the workplace pension provides what sits on top of it.