What Is Auto-Enrolment Pension?
By PayMetric Labs Research Desk
Short answer
Auto-enrolment is a legal requirement for employers to automatically place eligible employees into a workplace pension and contribute to it, unless the employee actively opts out.
In the UK, employers must auto-enrol eligible staff (generally aged 22 to State Pension age, earning above £10,000 a year) into a qualifying pension scheme. Minimum contributions total 8% of qualifying earnings, split as at least 3% from the employer and the rest from the employee (with tax relief covering part of the employee's share).
Ireland is introducing its own auto-enrolment pension system (branded MyFutureFund), bringing Ireland in line with the UK for employees who don't already have access to an occupational pension. Employer contributions start at 1.5% of qualifying earnings and are scheduled to increase over subsequent years, matched by employee contributions and a government top-up.
You can opt out of auto-enrolment, but doing so means giving up the employer contribution, effectively free money, since your employer only pays it if you're enrolled. Most financial advisers recommend staying enrolled unless you have a specific reason not to, given the employer match is rarely available anywhere else.
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This glossary entry is for general information only and does not constitute financial, tax, or legal advice. Rates and thresholds shown reflect current published guidance and may change.