Workplace pension

About workplace pensions

A workplace pension is a way of saving for your retirement that’s arranged by your employer.

Some workplace pensions are called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

How they work

A percentage of your pay is put into the pension scheme automatically every payday.

In most cases, your employer also adds money into the pension scheme for you. You may also get tax relief from the government.

Joining a workplace pension

All employers must provide a workplace pension scheme. This is called ‘automatic enrolment’.

Your employer must automatically enroll you into a pension scheme and make contributions to your pension if all of the following apply:

you’re classed as a ‘worker’
you’re aged between 22 and State Pension age
you earn at least £10,000 per year

What you, your employer and the government pay

The amount you and your employer pay towards the pension depends on:

what type of workplace pension scheme you’re in
whether you’ve been automatically enrolled in a workplace pension or you’ve joined one voluntarily (‘opted in’)

Example

You’re in a defined contribution pension scheme. Each payday:

you put in £40
your employer puts in £30
you get £10 tax relief
A total of £80 goes into your pension.

If you’ve been automatically enrolled

You and your employer must pay a percentage of your earnings into your workplace pension scheme.

How much you pay and what counts as earnings depend on the pension scheme your employer has chosen. Ask your employer about your pension scheme rules.

In most automatic enrolment schemes, you’ll make contributions based on your total earnings between £6,240 and £50,270 a year before tax. Your total earnings include:

salary or wages
bonuses and commission
overtime
statutory sick pay
statutory maternity, paternity or adoption pay

Workplace pension contributions

From April 2019

The minimum your employer pays 3%

You (employee) pay 5%

Total minimum contribution 8%

These amounts could be higher for you or your employer because of your pension scheme rules. They’re higher for most defined benefit pension schemes.

In some schemes, your employer has the option to pay in more than the legal minimum. In these schemes, you can pay in less as long as your employer puts in enough to meet the total minimum contribution.

If you’ve voluntarily enrolled in a workplace pension

Your employer must contribute the minimum amount if you earn more than: