Proposed changes to workplace pensions could increase minimum contributions from 8% to 12%, as experts warn that many workers are not saving enough for retirement. Separate legislation has already been approved to extend automatic enrolment to younger employees, although the measures have yet to take effect.
The proposals have renewed attention on the UK’s pension system, particularly the financial prospects of younger workers and those on lower incomes. With the Government’s pensions commission examining whether existing arrangements provide adequate retirement savings, further recommendations are expected in February 2027.
Pension Enrolment Could Begin at 18 Under Approved Legislation
Under current automatic enrolment rules, employers must enrol eligible workers into a workplace pension scheme. Employees generally qualify from the age of 22 until state pension age, provided they earn at least £10,000 annually. The state pension age is gradually increasing from 66 to 67 between April 2026 and April 2028.
Minimum workplace pension contributions currently stand at 8%, typically consisting of 5% from employees and 3% from employers. These contributions are calculated on qualifying earnings above £6,240 annually.
According to Chronicle Live, legislation approved in 2023 would lower the minimum automatic enrolment age from 22 to 18 and remove the £6,240 lower earnings threshold. This would mean eligible employees earning more than £10,000 annually would make pension contributions from their first £1 of earnings, rather than only on income above the existing threshold. The legislation has not yet been implemented.
Catherine Foot, director of the Standard Life Centre for the Future of Retirement, said the expansion could improve retirement prospects for younger employees and lower earners.
“Extending automatic enrolment from the age of 18 and ensuring pension contributions are calculated from the first £1 of earnings could make a real difference, particularly for those on lower incomes or starting out in their careers,” she said. Foot also noted that beginning pension saving earlier gives workers more time to build their retirement funds.
Experts Call for Pension Contributions To Rise to 12%
Beyond the approved legislation, the Standard Life Centre for the Future of Retirement is advocating a further increase in minimum workplace pension contributions. According to the Express.co.uk, the organisation wants the combined contribution rate to rise from 8% to 12%, representing an additional four percentage points.
The proposal remains a recommendation rather than an approved change to contribution requirements.
Foot said automatic enrolment had already helped millions of people save for retirement, but warned that existing arrangements were not reaching everyone. “Too many people are still missing out, while others aren’t saving enough to enjoy the retirement they hope for,” she said.
She argued that increasing contributions should be considered over time, while keeping payments affordable and improving workers’ understanding of pension saving. The debate is also being examined by the Government’s pensions commission, which is reviewing the adequacy and sustainability of retirement savings across the UK.
According to Chronicle Live, the commission’s interim findings indicate that automatic enrolment has increased workplace pension participation but has not delivered sufficient savings for many low- and middle-income earners. The commission also found that contribution levels vary considerably and that the existing 8% minimum has increasingly become the standard contribution rate rather than a baseline. Its final report, including recommendations to the Government, is expected in February 2027.
