All employers are now required to offer employees access to a qualifying pension scheme. 

Auto –enrolment is required for all employees age between 22 and state pension age who have earnings in excess of £10,000. Employers are required to provide access to a scheme into which are paid minimum contributions at a specified % of qualifying earnings - defined as gross pay between £6,240 – £50,270 from 6th April 2023. 

Most employers choose to meet their auto-enrolment obligation by enrolling employees in a defined contribution (DC) scheme 

The minimum %’s of qualifying earnings to a qualifying DC scheme has been 8% from 6th April 2019, of which at least 3% must be an employer contribution (which would mean the employee was required to pay 5%).

Minimum contribution %’s

Auto-enrolment minimum contributions

If an employer has a DC scheme with pensionable earnings defined differently to qualifying earnings then the % rates can differ  e.g. if all earnings are pensionable then the total requirement could be 7% and the employer minimum 3%, or if only basic pay is pensionable then the %’s would be 9% of which 4% would have to be paid by the employer.

Employers can satisfy the auto-enrolment requirement by offering a defined benefit (DB) scheme which meets minimum prescribed requirements.
(Advice on a strategy to deal with increasing contributions can be found under the Defined Contribution tag on the website –‘Time to review your DC Scheme’)