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Automatic pension enrolment

Key points

Employers will be required to enrol their eligible workers into a workplace pension if they are not already in one, this will enable people to save to have an income other than their state pension when they retire. Employers of all sizes are now part of the auto enrolment scheme, and the staged process will run until the end of 2017. Employers will have been given a date from which workers will be enrolled automatically. Those enrolled will:

  • be at least 22 years old
  • not have reached state pension age
  • earn more than the earnings trigger
  • work, or normally work in the UK.

Once employers have enrolled in the scheme they have to pay 1% of workers qualifying earning which can be either the:

  • entire wage before tax
  • amount on which workers pay national insurance contributions.

However, employers may decide to pay more that the minimum contribution. Workers pensions will be made up of their contributions, employer's contributions and tax relief and will be a percentage of the qualifying earnings.

Opting out

Workers may choose to leave or opt out of the pension scheme at any time, by signing an opt out form. If any worker opts out within a month of joining the scheme any money paid in will be paid back to them. If opting out any later then it will depend on the pension scheme's rules, normally this will mean it stays in the pension until such a time an income is taken.