What is pensions auto-enrolment? What are the contribution limits and earnings thresholds for employer pension automatic enrolment?

This is a freeview 'At a glance' guide to auto-enrolment earnings thresholds. 

Click here for detailed guidance to auto-enrolment (subscriber version) together with links to sample letters for clients.

Contribution levels

Under pensions automatic enrolment, both employee and employer make regular contributions to the employee's pension scheme.

The minimum total contribution, which is made up of employer's and employee's contributions inclusive of tax relief, is based on a percentage applied to earnings above the threshold up to the upper limit, which is linked to the National Insurance thresholds. The percentages increased during the transitional 'phasing' period as follows;

  Employers staging date Employer Employee Total minimum
contribution
Phase 1 To 05/04/18 1% 1% 2%
Phase 2 06/04/18 - 05/04/19 2% 3% 5%
Phase 3 06/04/19 onwards 3% 5% 8%

 

For example:

John earns £12,570 per annum. If his employer was required to auto-enrol him in 2023-24 the employer and employee will have to contribute a minimum of 8% of his salary in excess of the lower earnings threshold of £6,240, giving a contribution of £499.20 in total, of which at least half must be contributed by the employer. 

Note that the increases in total contributions to 5% and then 8% were originally due to take place in October 2017 and October 2018.  The six-month delay to align the increases with the tax year was announced at the Autumn Statement 2015.

There is an alternative contribution model, the pensionable earnings basis

Pensionable earnings are the higher of:

  1. The employer's definition of pensionable earnings, and
  2. Basic pay (which excludes variable elements of pay such as commission, bonuses, and overtime)

Under the pensionable earnings basis, contributions are based on the employee's earnings from £1 upwards and not by reference to earnings within the bandings.

Employers using a defined contribution scheme can choose not to base contributions on banded earnings if they satisfy one of the following minimum contributions requirements.

  Basis 1 Basis 2 Basis 3

Total Contribution

9% pensionable earnings 8% pensionable earnings 7% total earnings
Including employee contributions of up to 5% 5% 4%
Reference to total earnings None Pensionable earnings must be no less than 85% of total earnings All earnings must be pensionable

 

Earnings thresholds

You are automatically enrolled into your employer's pension when your earnings trigger the qualifying earnings thresholds.

2023-24

Annual

1 week

Fortnight

4 weeks

1 month

1 quarter

Bi-annual

Lower level of qualifying earnings

£6,240

£120

£240

£480

£520

£1,508

£3,120

Earnings trigger for automatic enrolment

£10,000

£192

£384

£768

£833

£2,499

£4,998

Upper level of qualifying earnings

£50,270

£967

£1,934

£3,867

£4,189

£12,567

£25,135

 

2022-23

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £6,240 £120 £240 £480 £520 £1,508 £3,120
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £50,270 £967 £1,934 £3,867 £4,189 £12,567 £25,135

 

2021-22

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £6,240 £120 £240 £480 £520 £1,508 £3,120
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £50,270 £967 £1,934 £3,867 £4,189 £12,567 £25,135

 

2020-21

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £6,240 £120 £240 £480 £520 £1,508 £3,120
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £50,000 £962 £1,924 £3,847 £4,167 £11,588 £25,000

 

2019-20

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £6,136 £118 £236 £472 £512 £1,508 £3,068
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £50,000 £962 £1,924 £3,847 £4,167 £11,588 £25,000

 

2018-19

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £6,032 £116 £232 £464 £503 £1,508 £3,016
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £46,350 £892 £1,783 £3,566 £3,863 £11,588 £23,175

 

2017-18

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £5,876 £113 £226 £452 £490 £1,469 £2,938
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £45,000 £866 £1,731 £3,462 £3,750 £11,250 £22,500

 

2016-17

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £5,824 £112 £224 £448 £485 £1,456 £2,912
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £43,000 £827 £1,654 £3,308 £3,583 £10,750 £21,500

 

2015-16

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £5,824 £112 £224 £448 £485 £1,456 £2,912
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £42,385 £815 £1,630 £3,260 £3,532 £10,596 £21,193

 

2014-15

Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £5,772 £111 £222 £444 £481 £1,443 £2,886
Earnings trigger for automatic enrolment £10,000 £192 £384 £768 £833 £2,499 £4,998
Upper level of qualifying earnings £41,865 £805 £1,611 £3,221 £3,489 £10,467 £20,933

 

2013-14Annual1 weekFortnight4 weeks1 month1 quarterBi-annual
Lower level of qualifying earnings £5,668 £109 £218 £436 £473 £1,417 £2,834
Earnings trigger for automatic enrolment £9,440 £182 £364 £727 £787 £2,360 £4,720
Upper level of qualifying earnings £41,450 £797 £1,594 £3,188 £3,454 £10,363 £20,725

 


Oak ad
Are you enjoying our content? 

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our receive our FREE SME Topical Tax Update & newletter.