Husky Finance

Auto-enrolment: the basics for employees

Having a retirement plan in place before the time comes is wise for your peace of mind.

To do that, you need to know exactly what you’re entitled to in terms of pension money. To begin with, there are three types of pensions:

  • State Pension
  • Workplace pension
  • Personal pension.

As of 2022/23, the State Pension will be £185.15 per week. This is not a substantial pension for any UK citizen to have a comfortable retirement but just enough to cover the basics. Which is the reason why auto-enrolment to a workplace pension was introduced by law.

In a workplace pension scheme, both the employer and the employee contribute to your savings, while your savings are being invested for you. You are automatically enrolled into a pension set up by your employer, if you qualify.

Lastly, a personal pension is an individual pension pot arranged by you but not everyone plans for a savings pot such as this one.

Auto-enrolment into a workplace pension scheme is essential for anyone’s retirement planning. And this is how it works.

What is Auto-Enrolment

It is a system of automatically enrolling employees to the company’s pension scheme. This means that each employer has a separate pension scheme that they enrol their employees to, and that each time an employee changes jobs they get auto-enrolled into a different workplace pension pot.

How does it actually work

To be registered in a workplace scheme, you have to be eligible with enough qualified earnings. Every month, you make steady payments to your pension from your salary, and you get tax relief in return.


To automatically enrol in a workplace pension you need to be:

  • over 22 years old and up to the State Pension age
  • earn over £10,000 per year
  • work in the UK
  • not be auto-enrolled in another workplace pension.

If you don’t qualify to automatically enrol with your workplace scheme, you can still ask your employer to be enrolled as they cannot refuse. They are obliged to enrol you for you to contribute to your pension if you ask to opt in. However, they don’t have to contribute if your earnings are below £6,240 a year.

You have access to these funds usually at 55, depending on the scheme. You can choose to differ and continue working and saving into your pension, or request a drawdown or purchase an annuity.


Payments to a workplace pension are made by both the employee and the employer. This helps your pot grow quicker, with the help of the Government’s tax relief added to your pot as well.

An employer adds a minimum of 3% of the employee’s qualifying earnings to their pension pot.

An employee adds 5% of their earnings to their pension. The  total minimum contribution is 8% of their qualifying earnings.However, your employer doesn’t have to contribute to your workplace pension that you auto-enrolled, if you earn this amount or less:

  • £520 a month
  • £120 a week
  • £480 over 4 weeks.

These payments are then invested for you by the pension provider, increasing your chances of having a bigger pot in retirement. It is important to mention though that investments carry risks, and it is not guaranteed that the value of your pension will only grow, as capital goes up and down.

Tax relief

The Government rewards those who save into a pension, in the form of tax relief. For example,

  • if you contribute to your workplace pension £40
  • your employer contributes £30
  • then the Government tops it up with £10.

How it works is that you pay income tax and National Insurance contributions but you don’t pay additional tax on your pension contributions as your pension provider claims it back for you instantly and adds it to your pot.

If you’re a high earner, you pay 40% or 45% tax, and your pension scheme operates on ‘relief at source’, your pension provider claims back 20% tax instantly and adds it to your pot; then you claim back the rest (20% or 25%) from the HMRC yourself.

Salary Exchange

It is worth mentioning the Salary Exchange scheme (or Salary Sacrifice) because it is a different way of contributing into a workplace pension.

If the employee agrees to join a Salary Exchange arrangement they are agreeing to give up a portion of their gross salary that doesn’t affect the National Minimum wage limit, for a non-cash benefit – usually to increase the value of a pension pot.

How it works is simple; you give up a percentage of your gross salary which goes straight into your pension pot. Then, automatically, your income tax lowers as well as your NIC and the contributions your employer has to make towards your NI. This means that both you and your employer save money, increase take-home pay and, if the employer wants to, they can add the company’s savings to the employee’s pension pot.

Husky takes care of workplace management for employers and employees to enjoy the benefits of such a workplace scheme.

Download the Husky app on Android or IOS to use the Salary Exchange calculator and figure out your potential savings.

What are the benefits of auto-enrolment

You are building a pension fund without realising it. You have a retirement plan in place that will secure you an income once you decide to stop working and retire.

It’s a great way to build up savings over the years for a more comfortable future, as relying on the State Pension only could prove to be difficult and unreliable.

As pensions are tax-free, saving into a workplace pension is also a very tax-efficient way of putting money to the side, saving employees up to 45% in taxes.

Unfortunately, self-employed people don’t have access to a workplace pension. This is because they work for themselves and are not part of a company. However, they can make the same amount of payments into a personal pension scheme, the only difference would be that they would have to arrange for this pension themselves instead of being auto-enrolled into one.

In Director-only companies though, they can contribute into a workplace pension if they want to, even though in most cases they have no obligation.

Can I opt out of the scheme?

You can opt in and out of a workplace scheme anytime you want to.

You should also be aware that when you first enrol, you have a month to opt out of the scheme and your money to be refunded to you. If a month passes, the payment stays in your pension pot until you reach retirement age.

Start your retirement planning journey today

Husky takes the stress away from pension management.

Employees feel more secure in their pension planning and saving, and employers make workplace pension a benefit instead of a must-do requirement.

It’s never too late to opt into your workplace pension and start contributing to your life savings. Start saving today.


Get more now. Have more later.

We setup and manage your pensions, payroll, and salary exchange—all in one place, ensuring compliance every step of the way.