Definition
A pension scheme arranged by an employer for the benefit of employees. Both the employer and employee typically make contributions, with the money invested to provide income in retirement. Workplace pensions can be defined contribution or defined benefit schemes.
UK Context
Under the Pensions Act 2008 and auto-enrolment legislation, UK employers must enrol eligible workers into a qualifying workplace pension scheme and make minimum contributions. The minimum total contribution is 8% of qualifying earnings (with at least 3% from the employer). NEST is the government-backed scheme available to all employers.
Best Practices
- Ensure auto-enrolment duties are met for all eligible jobholders from their start date or deferral date
- Re-enrol eligible employees who have opted out every three years at the re-enrolment date
- Provide clear pension information to employees and signpost the free Pension Wise guidance service
Frequently Asked Questions
What is the minimum employer pension contribution?
Employers must contribute at least 3% of qualifying earnings. Total minimum contributions (employer plus employee) must be at least 8% of qualifying earnings. Qualifying earnings for 2025/26 are earnings between 6,240 pounds and 50,270 pounds per year.
Can employees opt out of a workplace pension?
Yes, employees can opt out within one month of being enrolled and receive a full refund of any contributions. If they opt out after one month, contributions already made remain in the scheme. Employers must re-enrol opted-out employees every three years.