UK Pensions Explained: What You Actually Get
Your workplace pension is calculated on a slice of your salary, not all of it. The slice is smaller than most people think. That gap compounds to tens of thousands by retirement.
Qualifying earnings excluded by salary
Auto-enrolment ignores the first £6,240 of pay. Lower earners lose the biggest slice.
2026/27 UK pension headline numbers
| Item | 2026/27 value | Why it matters |
|---|---|---|
| Full new State Pension | £12,548/year | Needs 35 NI years |
| Lower qualifying earnings | £6,240 | Pay below this earns no AE contribution |
| Upper qualifying earnings | £50,270 | Pay above this is capped for AE |
| Auto-enrolment minimum | 8% total | 5% employee + 3% employer |
| Pension annual allowance | £60,000 | Or 100% of earnings if lower |
Source: gov.uk benefit and pension rates 2026/27.
Key takeaways
The full new State Pension pays 12,548 a year in 2026/27 and requires 35 qualifying years of National Insurance contributions. The triple lock guarantees it rises each year by the highest of inflation, average earnings growth, or 2.5%.
Auto-enrolment means most employees contribute at least 5% of qualifying earnings to a workplace pension, with employers adding at least 3%. This is not optional for employers.
NEST is the government-backed default pension scheme. It charges a 1.8% fee on every contribution plus a 0.3% annual management charge, which is higher than many alternatives.
Salary sacrifice lets you contribute to your pension from your gross pay, saving both income tax and National Insurance. Your employer saves NI too, and many pass that saving into your pension.