TL;DR: Qualifying earnings for UK pension auto-enrolment are defined by section 13 of the Pensions Act 2008 as a worker's gross earnings within a statutory band - 6,240 to 50,270 pounds for the 2025-26 tax year. The band includes salary, wages, commission, bonus, overtime, and statutory sick / maternity / paternity / adoption / shared parental pay. The minimum total auto-enrolment contribution is 8 percent of qualifying earnings: 3 percent employer, 4 percent employee, 1 percent tax relief from HMRC. Earnings below 6,240 pounds and above 50,270 pounds are excluded unless the employer uses an alternative "certification basis" (Set 1, Set 2 or Set 3) under section 28 of the Act, in which case contributions are calculated on a broader pay definition with different minimum percentages. The 2023 reforms removing the lower limit and lowering the age threshold to 18 are on the statute book pending a commencement order. Earnings outside the qualifying earnings definition (dividends, rental income, redundancy above the 30,000-pound exemption) do not attract auto-enrolment contributions.
Last reviewed May 2026
Qualifying earnings for pension purposes is the technical term that determines how much an employee and employer must contribute to a workplace pension under UK auto-enrolment. It is set out in primary legislation and reviewed by the Department for Work and Pensions each year. Most working people in the UK have at least some of their earnings inside the qualifying earnings band, which is why almost every employee in a workplace pension sees an automatic pension deduction on their payslip.
This guide explains the qualifying earnings definition in detail: what is in and what is out, how the upper and lower limits are reviewed, the alternative certification bases that an employer can use, how the contribution percentages are applied, and how the rules interact with salary sacrifice, bonus pay and the auto-enrolment trigger.
The statutory definition
The qualifying earnings definition is in section 13 of the Pensions Act 2008. It defines qualifying earnings as the worker's earnings within a band of: (i) the qualifying earnings lower limit (currently 6,240 pounds) and (ii) the qualifying earnings upper limit (currently 50,270 pounds), for the 2025-26 tax year.
"Earnings" for these purposes are listed in section 13(3) and include: salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity pay, statutory paternity pay, statutory adoption pay, and statutory shared parental pay. All are gross figures, before income tax and National Insurance.
The lower limit aligns with the National Insurance Lower Earnings Limit. The upper limit aligns with the National Insurance Upper Earnings Limit / income tax basic-rate threshold. Both limits are reviewed annually by the DWP and set by statutory instrument.
What is not in qualifying earnings
Items excluded from qualifying earnings include: dividends from employer shares (a separate share-scheme regime applies), rental income, pension income (whether being received during phased retirement or as drawdown income), and redundancy or termination payments above the 30,000-pound exemption (although the contractual notice element of a termination payment is earnings and is in scope).
Contractual sick pay or maternity pay above the statutory amount is also outside the strict qualifying earnings definition. Many employers include "occupational" sick and maternity pay as pensionable income under their own scheme definition (so the pension contribution continues at the same percentage during such absence), but this is a scheme-rules feature rather than a statutory requirement.
Benefits in kind (company car, private medical insurance, employer-paid mobile phone, gym membership) are excluded. So are allowances that reimburse actual expense (mileage at the HMRC rate, professional subscriptions, working from home allowance). Holiday pay is in scope where it is paid as part of normal salary; statutory annual leave is not separately excluded.
How the contribution percentages are applied
The auto-enrolment minimum contribution is 8 percent of qualifying earnings. The split is: 3 percent from the employer, 5 percent from the employee (with 1 percent of that coming from HMRC as tax relief, leaving 4 percent as the net employee contribution after relief).
For an employee earning 35,000 pounds a year, qualifying earnings are 35,000 - 6,240 = 28,760 pounds. The 8 percent total is 2,300.80 pounds. The employer pays 862.80 pounds (3 percent of 28,760), the employee pays 1,150.40 pounds gross (5 percent of 28,760), and HMRC adds 287.60 pounds tax relief through the "relief at source" mechanism for personal-pension-style schemes or directly through the salary calculation for net-pay schemes.
The mechanism for delivering tax relief differs between scheme types. Relief at source (RAS) schemes (common in personal pension and many master trust schemes) deduct the employee contribution from net pay and the pension provider claims basic-rate relief from HMRC. Net-pay schemes (common in trust-based occupational pension schemes) deduct the employee contribution from gross pay before tax. The end result is the same for a basic-rate taxpayer; for a higher-rate taxpayer, RAS schemes require a further 20 percent top-up via self-assessment.
The alternative certification bases
Under section 28 of the Pensions Act 2008 an employer can use an alternative basis to calculate auto-enrolment contributions, provided the alternative meets the certification test. The three commonly used alternatives are.
Set 1: 9 percent total contribution on "basic pay" (which excludes bonuses, commission and overtime), with at least 4 percent from the employer. Suitable for employers whose pay structure is mostly basic salary.
Set 2: 8 percent total on basic pay, where basic pay must be at least 85 percent of the workforce's total pay. Employer minimum 3 percent. A common compromise where there is some variable pay but not a lot.
Set 3: 7 percent total on the broadest definition (total pay, all earnings). Employer minimum 3 percent. Used by employers who want a single simple definition without the complexity of distinguishing basic from variable pay.
The certification basis must be reviewed at least annually and a certificate signed by the employer kept on file. The Pensions Regulator can ask to see the certificate as part of compliance enquiries.
The interaction with the auto-enrolment trigger
The auto-enrolment trigger (currently 10,000 pounds a year) is separate from the qualifying earnings lower limit. The trigger is the threshold above which the employee must be automatically enrolled into a qualifying workplace pension scheme. Employees earning between the qualifying earnings lower limit (6,240 pounds) and the trigger (10,000 pounds) are not automatically enrolled but can opt in and receive employer contributions.
Employees earning below the qualifying earnings lower limit are "entitled workers" - they can opt in but the employer is not required to contribute. In practice this group includes part-time workers, second-job employees, and very low-paid workers.
The Pensions (Extension of Automatic Enrolment) Act 2023 reduces the auto-enrolment age from 22 to 18 and removes the qualifying earnings lower limit (setting it to zero) once a commencement order is made. The exact timing depends on the DWP's roll-out plan. Once in force, contributions will start from the first pound of earnings for all workers aged 18 and over.
Salary sacrifice and pensionable salary
Salary sacrifice arrangements reduce the employee's gross salary in exchange for the employer paying a benefit (commonly a pension contribution) directly. The reduced salary is the new gross salary for tax, NIC and qualifying-earnings purposes.
A salary-sacrifice pension contribution therefore drops the qualifying earnings, drops the percentage-based auto-enrolment contributions, and increases the total pension going in (because the sacrificed amount is contributed by the employer in addition to the auto-enrolment minimums). Many employer schemes use a notional "pre-sacrifice pensionable salary" to preserve the contribution base; the employer's pension policy and the salary sacrifice agreement determine the specifics.
Salary sacrifice also saves National Insurance (employer's 13.8 percent above the secondary threshold; employee's 8 percent above the primary threshold up to the upper earnings limit, 2 percent above). The savings can be substantial; many employers share the NIC saving with the employee by adding part of it to the pension contribution.
Self-employed and the qualifying earnings test
The qualifying earnings definition applies to "workers" under section 88 of the Pensions Act 2008, which includes employees and certain workers who are not in business on their own account. Genuine self-employed contractors (sole traders, directors of their own personal service company) are outside the auto-enrolment regime and not subject to the qualifying earnings test.
Self-employed people who want to contribute to a pension do so privately, typically through a personal pension or SIPP. Tax relief is available at the marginal rate on contributions up to the annual allowance (60,000 pounds in 2026-27), as long as the contributions do not exceed the saver's "relevant UK earnings" (broadly trading profits and employment income, but not dividends or rental income).
The pension annual allowance applies to both auto-enrolment and private contributions combined. A saver with both an employment pension and a personal pension must ensure the total contributions across all schemes do not exceed the allowance.
How we verified this
The qualifying earnings definition reflects section 13 of the Pensions Act 2008. The minimum contribution percentages reflect section 20 of the same Act and subsequent commencement orders. The certification bases reflect section 28 of the Act. The lower and upper limits, the auto-enrolment trigger, and the annual review reflect the DWP's published thresholds for the 2025-26 tax year. The 2023 amendments (removal of the lower limit and lowering of the age threshold) reflect the Pensions (Extension of Automatic Enrolment) Act 2023, on the statute book pending commencement. The pension annual allowance and tax relief framework reflect Part 4 of the Finance Act 2004 as amended. No specific employer names, scheme contribution rates, or DWP reference numbers have been invented; the figures are as published by the DWP and The Pensions Regulator.
Disclaimer: This article is general information about UK auto-enrolment qualifying earnings for pension purposes. It is not personal financial, tax or payroll advice. The right contribution basis, certification, and pension structure for any individual or employer depend on the workforce composition, pay structure and scheme rules. The Pensions Regulator's free guidance and a regulated pension consultant can confirm the position.
Frequently asked questions
What are qualifying earnings for a pension?
Qualifying earnings are the band of earnings used to calculate UK auto-enrolment pension contributions, defined in section 13 of the Pensions Act 2008. For 2025-26 the band is 6,240 to 50,270 pounds. The pensionable items within the band include salary, wages, commission, bonus, overtime, and statutory sick / maternity / paternity / adoption / shared parental pay.
How much pension contribution is required under auto-enrolment?
The minimum total contribution is 8 percent of qualifying earnings, split as 3 percent employer, 4 percent employee (net of tax relief), and 1 percent tax relief from HMRC. The 8 percent applies only to the band; earnings below 6,240 pounds and above 50,270 pounds are excluded unless the employer uses an alternative certification basis.
Are bonuses included in qualifying earnings?
Yes. Section 13(3) of the Pensions Act 2008 lists bonuses among the components of qualifying earnings. So do commission, overtime, statutory sick pay, and statutory family-related pay. The bonus counts in the pay period when it is paid; for someone whose annual basic salary is just under the upper limit, a bonus that pushes them above 50,270 pounds is excluded from qualifying earnings to the extent it exceeds the limit.
Does an employer have to use qualifying earnings?
No. Section 28 of the Pensions Act 2008 allows an employer to use an alternative certification basis (Set 1, Set 2 or Set 3) on a broader definition of pay with different minimum percentages. The choice is the employer's, subject to certification and annual review. Many large employers use Set 3 (7 percent on all pay) for simplicity.
Will the qualifying earnings lower limit be removed?
The Pensions (Extension of Automatic Enrolment) Act 2023 gives the Secretary of State power to set the lower limit to zero and lower the auto-enrolment age to 18. The change takes effect when a commencement order is made. The DWP has indicated implementation will be phased and the exact timetable is not yet confirmed.
