Auto-enrolment is the legal duty on UK employers to automatically place eligible workers into a workplace pension and pay contributions. Workers are enrolled by default and can opt out, but are re-enrolled roughly every three years if they do.
In one line: Auto-enrolment requires employers to put eligible staff into a workplace pension automatically unless the worker chooses to opt out.
How auto-enrolment works
The duty comes from the Pensions Act 2008 and is overseen by The Pensions Regulator. Eligible workers are aged 22 to State Pension age and earning above 10,000 GBP a year. Minimum total contributions are 8% of qualifying earnings, with at least 3% from the employer.
For example, on qualifying earnings of 25,000 GBP, an 8% total contribution is 2,000 GBP a year, of which the employer pays at least 750 GBP and the rest comes from the worker plus tax relief.
Opting out within the opt-out window returns any contributions made. Staying in means the employer contribution and tax relief continue to be added.
Auto-enrolment vs salary sacrifice
Auto-enrolment is about who gets put into a pension and the minimum amounts paid in. It sets the floor for contributions but does not dictate how those contributions are routed.
Salary sacrifice is a separate arrangement for paying contributions tax-efficiently. An auto-enrolled worker may or may not pay via salary sacrifice depending on the employer's setup.
Primary source: The Pensions Regulator: Automatic enrolment