Pension auto-enrolment thresholds to remain frozen – what it means for your retirement savings

The government has confirmed that pension auto-enrolment thresholds will remain frozen for 2025-2026 tax year. 

This means workers earning more than £10,000 will continue to be enrolled into a workplace pension, with contributions based on money earned between £6,240 and £50,270. 

Here, Which? explains why auto-enrolment thresholds remain frozen and how pension savers can grow their retirement pot.

How auto-enrolment works

If you're aged 22 or over, are in full-time employment and earn more than £10,000 a year, it's likely you were automatically enrolled into a workplace pension when you joined your current company.

Auto-enrolment pensions were launched in 2012 and require a total minimum contribution of 8% of the employee's salary. The employer must pay at least 3%, although some pay more. The remainder is paid by the employee. 

The minimum contribution applies to anything earned over £6,240 up to a limit of £50,270. This is called the qualifying earnings band.

Each year, the government reviews the automatic enrolment earnings thresholds, which include the 'qualifying earnings band' and the 'qualifying earnings trigger' (currently £10,000). 

By the end of 2024, over 11 million workers had been automatically enrolled, and more than 2.4 million employers had paid into auto-enrolment pensions.

• Find out more: auto-enrolment explained

Why have thresholds remained frozen?

In a written statement to Parliament, pensions minister Torsten Bell explained the decision was made to ‘ensure the continued stability of automatic enrolment for employers and individuals'.

Rising wages mean that keeping the earnings trigger at £10,000 is expected to boost private sector pension participation to 16 million, with total annual contributions reaching £90bn.

However, some experts argue that keeping thresholds frozen is a missed chance to help more people save enough for retirement.

In 2023, legislation was passed to allow pension contributions to be made from the first pound of earnings by removing the lower earnings limit. However, the government has yet to implement this change.

There are also concerns that as salaries increase, workers earning more than £50,270 may miss out on employer pension contributions on income above this threshold.

• Find out more: you can use the Money Helper workplace contribution calculator to help you work out how much you'll pay into your pension and the tax relief you'll get on contributions.

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Are you saving enough?

To ensure that you save enough for retirement, you'll first need to have a rough idea of how much you'll need.

To make this easier, the Pension and Lifetime Savings Association (PLSA) has developed three ‘retirement living standards’. These reflect the income you would theoretically need for a 'minimum', 'moderate' and 'comfortable' standard of living in retirement.

For a comfortable standard of living in retirement, the PLSA says that single-person households need £43,100 a year, while couples need £59,000.

Use our pension calculator to give you an idea of how much your pensions will give you in retirement and what that might mean in terms of annual income.

• Find out more: how much you need to retire

How to boost your retirement pot

Small changes can make a big difference to the size of your pension savings. We’ve rounded up four simple ways to increase yours. 

1. Increase your contributions

Paying more than the minimum contribution can make a big difference over time.

For example, according to wealth management firm Quilter, a worker saving the minimum contribution level (8%) from age 20 to 67 on an average UK salary of £35,000 will have a pension pot of £211,000 when they retire. 

Here’s how increasing your total contributions by 5% at different ages could boost your retirement savings:

• From age 35: increasing contributions by 5% from age 35 would add an average of £73,000 to retirement pots, resulting in a total fund of £284,000.
• From age 45: a 5% increase from age 45 would boost the pot by £46,000, giving a total of £256,000.
• From age 55: increasing contributions by 5% at age 55 could add £21,000, leaving a final pot of £232,000.

Find out more: why making decisions about your pensions could soon become easier

2. See if your employer will match

Some employers match extra contributions you make to your pension, offering a valuable way to grow your savings faster.

While most employers cap matching contributions, even a 1% increase from both sides can make a significant difference over time.

• Find out more: how small boosts can add thousands to your pension pot

3. Trace lost pensions

Tracking down your lost pensions could significantly boost your retirement savings.

Around 3.3m pension pots are currently considered lost, with an average value of £9,500 – rising to £13,600 among people aged 55 to 75, according to the Pension Policy Institute. 

There are plenty of free online tools you can use to hunt them down, as we explain in our guide to finding lost pensions.

4. Use windfalls wisely

You can pay lump sums into your pension alongside regular contributions. 

If you receive a windfall, such as a bonus or inheritance, consider putting this money into your pension to help you reach your retirement goals.