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What is the minimum contribution requirement for a UK occupational pension scheme?
What is the minimum contribution requirement for a UK occupational pension scheme?
Updated over 8 months ago

In the UK, all employees over 22 and under state pension age (it varies for individuals depending on when they were born), and earning more than £10,000/year must be enrolled in a workplace pension scheme. This is called 'auto-enrolment'.


Organisations should run a check on all their employees for these workplace pension scheme eligibility criteria. These checks must be performed at every pay period in case of a change, such as a salary change or an employee reaching the age of 22. Employers are expected to get a statutory letter to inform their employees of how they have been assessed.

The minimum requirements are based on the contribution rate and require that under the scheme:

  • the employer must make contributions in respect of the employee;

  • the total (employer + employee) minimum contribution, however calculated, must be at least 8% of the employee's qualifying earnings in the relevant pay reference period;

  • the minimum employer’s contribution, however calculated, must be at least 3% of the employee's qualifying earnings in the relevant pay reference period. This leaves the employee to make up the remaining 5%. Or, you can contribute more, bringing the employee contribution down also.

The default auto-enrolment scheme provided at Kota works off banded earnings. That is, you’ll make contributions based on your employee's total annual earnings between £6,240 and £50,270 (before tax). This means that if your employee earns more than £10,000/year, the first £6,240 won't have any contribution applied. Yet, from £6,240 to £50,270 maximum, the contribution percentage you've set up will be applied.

Practical example

Here's a practical example for an employee who earns £60,000/year, and whose contributions have been set up as 3% (employer) + 5% (employee):

  • £0 to £6,240 - no contributions

  • £6,240 to £50,270 = £44,030 to apply 3% (employer) and 5% (employee) contributions
    Which makes, £1,320.90 employer contribution + £2,201.50 employee contribution = £3,522.40 total contribution/year

  • £50,270 to £60,000 - no contributions

For more comprehensive and up-to-date information, please read here.

In case you'd like to create a pension scheme with unbanded earnings, or one of the three self-cert tiers, please contact [email protected] for next steps.

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