Money & Banking · Banking
Auto-enrolment: the pension you get by default
Employers must auto-enrol most workers into a pension — you contribute, they contribute, and opting out means giving up free money.
If you work for a UK employer and earn over £10,000 a year, your employer must automatically enrol you into a workplace pension scheme. This is auto-enrolment — a system designed to help millions of workers save for retirement without having to opt in themselves. The catch? You can opt out, but doing so means walking away from your employer's contributions, which is essentially free money toward your retirement.
Who gets auto-enrolled?
You will be automatically enrolled if you meet three criteria. First, you must be aged 22 or older and below State Pension age (currently 66, rising to 67 between 2026 and 2028). Second, you must earn at least £10,000 a year, which your employer checks on each pay date. Third, you must work in the UK, whether on a permanent contract, temporary role, zero-hours contract, or as an agency worker.
Your employer looks at your earnings with them alone, not your total income from multiple jobs. So if you have two part-time roles, each employer checks whether you earn over £10,000 with them specifically. Workers under 22, over State Pension age, or earning less than £10,000 are not automatically enrolled, though they can ask to join a scheme voluntarily if their employer offers one.
How much do you and your employer contribute?
The law sets a minimum total contribution of 8% of your qualifying earnings. This breaks down into at least 3% from your employer and 5% from your salary. Your qualifying earnings are the portion of your pay that falls between £6,240 and £50,270 in the 2026/27 tax year — money below £6,240 and above £50,270 is not counted.
The 5% deducted from your salary is net of basic-rate tax relief, meaning HMRC tops up your contribution automatically. Many employers pay more than the legal minimum, sometimes covering the full 8% themselves, so you take home your full gross salary. Check your employment contract or payslip to see what your employer actually contributes.
Can you opt out?
Yes, but there is a limited window. You have roughly one month from when your employer sends you the enrolment letter or when you become an active scheme member, whichever is later, to opt out without penalty. If you opt out within this period and have been contributing for less than a month, you can claim a refund of your contributions.
If you miss the opt-out window or opt out after it has closed, you cannot recover contributions already paid. More importantly, your employer will re-enrol you every three years automatically, giving you another chance to stay in — or another opportunity to opt out again if your circumstances change.
What happens to your pot if you leave your job?
When you change jobs, your workplace pension does not disappear. You become a deferred member of the scheme, and your accumulated pot remains invested with the original provider. Both you and your employer stop making contributions, but your money continues to grow (or fall) with the market. Your new employer will typically enrol you into their own workplace scheme, creating a separate pension pot unless you actively consolidate your old pots.
Many workers build up multiple small pension pots over a career. You can leave them where they are, combine them into one scheme, or transfer them to a personal pension. There are no tax penalties for keeping pots dormant with old employers — the funds remain available when you reach retirement age (currently 55, rising to 57 in 2028).
Leaving the UK: pension transfers and QROPS
If you are emigrating or moving abroad for work, your UK pension pot does not automatically follow you. Your pension stays with your UK provider until you choose to do something with it. You can continue to hold a UK pension and draw from it while living abroad, though some providers may restrict how they pay (typically into a UK bank account rather than directly overseas).
If you want to transfer your pension to a scheme in your new country, the scheme must be a Qualifying Recognised Overseas Pension Scheme (QROPS) — an overseas scheme that meets HMRC criteria. Transferring to a non-QROPS scheme may trigger unauthorised payment tax charges of up to 55%, which you must pay yourself. Transfers to qualifying schemes can also incur an overseas transfer charge depending on where the scheme is based and your residency status.
If you leave your pension in the UK, you will be liable for UK tax on any income or withdrawals, even as a non-resident. Some countries have double-taxation agreements with the UK to prevent paying tax twice, so check the rules for your destination country before deciding. Many expats find it simpler to leave pots in the UK rather than manage transfers, especially if balances are modest.
State Pension and National Insurance qualifying years
Auto-enrolment pension contributions are separate from the National Insurance (NI) contributions that build your State Pension entitlement. Your State Pension depends on how many qualifying years of National Insurance contributions or credits you have accumulated. To receive any State Pension at all, you need at least 10 qualifying years. For the full new State Pension (if you reach State Pension age on or after 6 April 2016), you need 35 qualifying years.
A qualifying year is any tax year (6 April to 5 April) in which you paid sufficient National Insurance contributions or received National Insurance credits. Most employees building an auto-enrolment pension are simultaneously building qualifying years, but it is not automatic — you must have earned above the NI threshold or received eligible credits.
Checking your National Insurance record
You should regularly check your National Insurance record to see how many qualifying years you have and whether there are any gaps. You can do this for free through your Personal Tax Account on GOV.UK or using the HMRC App. Your record will show each tax year marked as 'full', 'not full', or as a gap. Gaps can arise if you did not earn enough, were not in work, or if your employer failed to report contributions correctly.
Errors do occur and are easier to correct early. If you spot a missing contribution or wrongly recorded year, contact HMRC to correct it. You can also fill gaps from the previous six complete tax years by paying voluntary National Insurance contributions, though you will need to check whether this would actually increase your State Pension entitlement before paying.
- Check your record online at GOV.UK (Personal Tax Account) or via the HMRC App
- Call the Future Pension Centre (free) on 0800 731 0175, Monday to Friday, 8am to 6pm
- Write to HMRC National Insurance Contributions Office, BX9 1AN, including your name, address, date of birth, and National Insurance number
- Review your record every few years to spot gaps early
Building qualifying years as an expat or worker abroad
If you work abroad, you may not accumulate UK qualifying years unless your employer pays UK National Insurance contributions. Self-employed people living abroad can pay voluntary National Insurance contributions (Class 3) to maintain or build qualifying years, though at a cost. Non-residents can also be eligible for National Insurance credits in some circumstances, such as caring for a child or receiving certain benefits, so explore whether any credits apply to you.
When you return to the UK or resume UK employment, you can resume building qualifying years. The system includes transitional rules and past periods of contracting out, meaning many workers receive slightly more or less than the headline rate of State Pension depending on their individual history. If you are unsure whether your record is complete or correct, ask the Future Pension Centre for guidance.
Key points to remember
- Auto-enrolment is automatic: at age 22+, earning over £10,000, and employed in the UK, you will be enrolled unless you opt out
- The minimum is 8% total contributions (at least 3% from your employer), calculated on earnings between £6,240 and £50,270
- You have roughly one month to opt out from when you receive the enrolment letter
- Every three years, eligible employees are automatically re-enrolled
- Your pension pot is yours and stays with your provider even if you change jobs
- If you move abroad, you can leave your UK pension in place or transfer it to a QROPS (at potential cost)
- Your State Pension entitlement depends on National Insurance qualifying years, not auto-enrolment contributions — check your record regularly
- Gaps in your National Insurance record can sometimes be filled by paying voluntary contributions, but check if it's worthwhile first
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