Minimum Pension Contribution: The UK Employer Guide
The minimum total pension contribution under automatic enrolment is 8% of qualifying earnings, split between a minimum 3% from the employer and 5% from the worker [1]. That percentage applies only to earnings inside a defined band, between £6,240 and £50,270 for the 2026-27 tax year [2].
The figures look simple, but the calculation behind them is not. A worker earning £30,000 does not receive 8% of £30,000 into a pension. The contribution is worked out on the slice of pay above the lower limit and below the upper limit, which changes the real cost for both sides.
This guide explains where the 8% figure comes from, how the employer and worker split works, how the qualifying earnings band narrows the calculation, the alternative certification bases an employer can use, and how tax relief is applied to the worker's share.
Key takeaways
- The minimum total contribution is 8% of qualifying earnings: at least 3% from the employer and the balance from the worker [1].
- Qualifying earnings for the 2026-27 tax year run from £6,240 to £50,270, held at the previous year's levels [2].
- Contributions are calculated only on the band between those two limits, not on total pay [3].
- An employer may certify a different earnings basis, but the resulting contribution must equal or exceed the qualifying-earnings minimum [5].
- The 8% minimum was reached in two phases, in April 2018 and April 2019, from an original 2% floor [1].
What the minimum pension contribution is
Automatic enrolment obliges every UK employer to put eligible workers into a workplace pension and pay into it [4]. The law sets a floor on how much must go into that pension each pay period. That floor is the minimum contribution.
The minimum is expressed as a percentage of a worker's qualifying earnings rather than a flat cash sum, so it scales with pay. The total minimum is 8%, and the law fixes the smallest share the employer can pay at 3% [1].
The 3% employer and 5% worker split
Where the employer pays only the 3% minimum, the worker makes up the remaining 5% to reach the 8% total [1]. The worker's 5% includes the basic-rate tax relief added by the government, so the amount actually taken from net pay is smaller than 5% under a relief-at-source scheme [7].
An employer may choose to pay more than 3%. If it does, the worker's required share falls correspondingly, because the 8% total is what matters [3]. An employer paying 5% would leave the worker to pay 3%, for example. The table below sets out the statutory split on the qualifying-earnings basis.
| Party | Minimum share of qualifying earnings |
|---|---|
| Employer | 3% |
| Worker (including tax relief) | 5% |
| Total minimum | 8% |
Getting this split right every pay period is a core payroll task, and HMRC-recognised payroll software applies the correct percentages automatically once the scheme basis is configured.
Qualifying earnings and how the band works
The 8% is not applied to a worker's whole salary. It is applied only to qualifying earnings, which are the earnings that fall between a lower and an upper limit [3]. Pay below the lower limit and above the upper limit is left out of the sum entirely.
The 2026-27 qualifying earnings band
For the 2026-27 tax year, the lower limit is £6,240 and the upper limit is £50,270. Both figures were held at the level set for the previous tax year, a decision confirmed in a written statement to Parliament [6] [2]. The separate earnings trigger that decides who must be enrolled stayed at £10,000 [2].
| Threshold | Annual | Monthly | Weekly |
|---|---|---|---|
| Lower limit of qualifying earnings | £6,240 | £520 | £120 |
| Earnings trigger for auto-enrolment | £10,000 | £833 | £192 |
| Upper limit of qualifying earnings | £50,270 | £4,189 | £967 |
A worked example on qualifying earnings
A worker earning £30,000 a year has qualifying earnings of £23,760, being £30,000 minus the £6,240 lower limit [3]. The total 8% contribution is £1,900.80 a year, not the £2,400 that 8% of full pay would suggest [4].
Of that total, the employer's 3% share is £712.80 and the worker's 5% share is £1,188 before tax relief is accounted for [1]. The gap between 8% of qualifying earnings and 8% of total pay is why the lower limit matters so much to the real cost. For sole-trader businesses taking on their first employee, this distinction is often the first surprise of running payroll.
Alternative certification bases
Qualifying earnings is the default basis, but it is not the only lawful one. An employer whose payroll runs on basic pay or total pay can certify the scheme against one of three alternative sets, provided the contribution reaches an equivalent minimum [5].
The three certification sets
Certification allows an employer to base contributions on pensionable pay defined by the scheme, rather than the qualifying-earnings band, as long as the outcome is at least as generous [5]. The three sets carry higher headline percentages precisely because they are calculated from the first pound of the relevant pay, with no lower limit deducted [5].
| Set | Basis | Minimum employer | Minimum total |
|---|---|---|---|
| Set 1 | At least basic pay | 4% | 9% |
| Set 2 | Basic pay, where basic pay is at least 85% of total pay | 3% | 8% |
| Set 3 | All earnings | 3% | 7% |
Sources: [5].
An employer using a certification basis must self-certify that the scheme continues to meet the standard, and the certificate is valid for a defined period before it must be renewed [5]. Choosing the right basis affects payroll configuration, and a multi-client payroll dashboard lets a bureau apply the correct basis per client scheme without re-keying rates each period.
How the worker's contribution attracts tax relief
The worker's share of the minimum contribution carries tax relief, but the mechanism depends on the scheme type. Two methods are in common use, and they produce a different figure on the payslip [7].
Relief at source and net pay arrangements
Under relief at source, the employer deducts 80% of the worker's contribution from net pay, and the pension provider reclaims the remaining 20% basic-rate relief directly from HMRC [7]. A worker whose gross contribution is 5% of qualifying earnings therefore sees only 4% leave their pay [10].
Under a net pay arrangement, the full contribution is taken from gross pay before income tax is calculated, so relief is given at the worker's marginal rate through payroll [7]. The method matters most for the lowest earners: a worker below the personal allowance still receives 20% relief under relief at source, but receives none under a net pay arrangement because no tax was due to relieve [10].
| Method | What leaves the payslip | Relief given by |
|---|---|---|
| Relief at source | 80% of the contribution (net) | Pension provider reclaims 20% from HMRC |
| Net pay arrangement | Full contribution (gross) | Lower taxable pay through payroll |
Handling the correct relief method is a payroll-engine responsibility, and a UK payroll engine applies the right calculation for each scheme so the payslip and the remittance agree.
How the 8% minimum was reached
The 8% floor has not always been the standard. When automatic enrolment began, the minimum was far lower, and it rose in stages as the policy matured [8].
Phasing from 2% to 8%
The original minimum was 2% of qualifying earnings, with a 1% employer share [1]. It rose to 5% in April 2018 and to the current 8% in April 2019 [1]. More than 22 million workers have been automatically enrolled since the policy started, with opt-out rates staying below 10% throughout the phasing [8].
| Period | Minimum employer | Minimum worker | Minimum total |
|---|---|---|---|
| Before 6 April 2018 | 1% | 1% | 2% |
| 6 April 2018 to 5 April 2019 | 2% | 3% | 5% |
| From 6 April 2019 | 3% | 5% | 8% |
The salary sacrifice reform ahead
A separate change affects how contributions above the minimum are treated for National Insurance. Many employers route pension contributions through salary sacrifice, which currently removes the sacrificed amount from both employer and worker National Insurance [9]. From 6 April 2029, only the first £2,000 of sacrificed pension contributions each year will stay exempt, and amounts above that will attract National Insurance for both sides [9]. With employer National Insurance at 15%, the change raises the cost of large sacrificed contributions, so employers reviewing their small business payroll setup should factor the future cap into any salary-sacrifice design.
Conclusion
The minimum pension contribution is one number, 8%, resting on a set of rules that decide what it is charged on and who pays each slice. The qualifying-earnings band is the part most often misread, because it turns a headline 8% into a materially smaller real contribution once the lower limit is stripped out.
The direction of travel points towards more automation of these calculations rather than less. Certification bases, two tax-relief methods and a looming change to salary-sacrifice treatment all sit inside the same monthly payroll run, and each one is a place where a manual process can drift out of compliance. A payroll platform that reads the scheme basis and applies the right rate, relief method and remittance keeps the minimum contribution correct without an employer having to reinterpret the rules every April.
Frequently asked questions
What is the minimum pension contribution an employer must pay in the UK?
The minimum an employer must pay into a worker's automatic-enrolment pension is 3% of the worker's qualifying earnings [1]. The worker then pays enough to bring the total to 8%, which usually means 5% including tax relief. An employer can choose to pay more than 3%, in which case the worker's required share falls, because the 8% total is the figure that must be met [3].
Is the 8% minimum calculated on total salary or qualifying earnings?
By default it is calculated on qualifying earnings, which for the 2026-27 tax year are the earnings between £6,240 and £50,270 [2]. Earnings below the lower limit and above the upper limit are excluded. An employer can instead certify the scheme on a basic-pay or total-pay basis, but the contribution must then meet the equivalent minimum under one of the three certification sets [5].
Why is less than 5% deducted from my pay for a 5% pension contribution?
Under a relief-at-source scheme, the employer deducts only 80% of the worker's contribution from net pay, and the pension provider claims the remaining 20% basic-rate tax relief from HMRC and adds it to the pot [7]. So a 5% gross contribution costs the worker 4% of qualifying earnings out of net pay [10]. Under a net pay arrangement the full amount comes out of gross pay instead, with relief given through the payroll calculation.
Can an employer and worker agree to pay less than the minimum?
No. The 8% total is a statutory floor for eligible jobholders, and the employer must always pay at least its 3% share [1]. A worker who does not want to contribute can opt out of the scheme entirely within the opt-out window, but there is no route to staying enrolled while paying below the minimum [4]. If a worker reduces contributions below the minimum, the employer must re-enrol them at the next cyclical re-enrolment.
