How your pension works

When you start a job, your employer will usually automatically enrol you into its workplace pension scheme. This is known as automatic enrolment (auto-enrolment).

To be eligible for automatic enrolment, you will generally need to:

• Be aged between 22 and State Pension age.
• Earn at least £10,000 a year (2026/27 tax year).*
• Work in the UK.

You can choose to opt out and opt back in later if you change your mind.

You pay into your pension each month, and your employer contributes too.

• You typically pay a percentage of your salary.
• Your employer usually contributes as well and, for many members who are automatically enrolled, minimum legal contribution requirements may apply. The amount paid will depend on your scheme’s rules and your employer’s arrangement.

In some cases, if you increase your contributions, your employer may increase theirs too, subject to the scheme’s rules and your employer’s contribution structure.

You get tax relief on the money you pay into your pension, depending on the way contributions are collected and your individual circumstances.

This means:

• Your contributions cost less than you might think.
• Tax relief can increase the amount invested in your pension. Tax treatment depends on your individual circumstances and may change in the future. 

Your pension contributions are invested to help them grow over time.

• Your pension investments are managed in line with the investment options available.
• If you have a DC pension, you may be able to choose your own funds.

Investing aims to grow your pension savings over the long term, although investment returns are not guaranteed and the value of investments can go down as well as up.