Worked example: £40,000 salary
Qualifying earnings are £33,760 (£40,000 minus the £6,240 lower offset). You pay £1,350.40 from your wages, HMRC adds £337.60 of tax relief, your employer adds £1,012.80 — £2,700.80 a year into your pot, of which only £1,350.40 ever left your pay. That leverage is why opting out is usually expensive.
Frequently asked questions
How much goes into my pension at the minimum rates?
8% of your qualifying earnings (the slice between £6,240 and £50,270): you effectively contribute 5% — 4% from your pay plus 1% tax relief — and your employer adds at least 3%. On £40,000 that's £2,700.80 a year in total.
Why is only part of my salary counted?
Auto-enrolment minimums apply to qualifying earnings only — earnings between £6,240 and £50,270. Many calculators wrongly apply 8% to your whole salary and overstate the pot. Employers can choose to contribute on full salary, but the legal minimum uses the band.
What if I earn under £10,000?
You're not auto-enrolled, but between £6,240 and £10,000 you can opt in and your employer must contribute too. Under £6,240 you can join but the employer doesn't have to pay in.
Can I opt out?
Yes, within a month of enrolment for a full refund (and any time after, keeping what's in the pot). You'll be re-enrolled roughly every three years if still eligible. Opting out also stops the employer contributions — that's the real cost.
Rates checked against official sources on 1 November 2026: GOV.UK workplace pensions: what you, your employer and the government pay. See how we calculate (UK) for the full method.