A significant shift in the UK's pension landscape means hundreds of thousands more part-time and low-income workers will now be automatically enrolled into a workplace pension scheme. New analysis from Standard Life reveals that from April 2026, working just 15 hours per week on the upcoming National Living Wage will be enough to qualify.
The Shifting Thresholds of Auto-Enrolment
When the government's flagship auto-enrolment policy launched in 2012, the rules were far stricter. Back then, the National Minimum Wage for those aged 21 and over was £6.19 per hour, and the annual earnings trigger for auto-enrolment was set at £8,105. This meant an employee needed to work around 25 hours every week throughout the year to be eligible for their employer's pension scheme.
The game-changer has been the rapid rise in the minimum wage, which has significantly outpaced the static auto-enrolment earnings threshold. The UK Government has confirmed the National Living Wage (NLW) for those aged 21 and over will rise to £12.71 from April 2026. Meanwhile, the annual earnings trigger has remained frozen at £10,000 since 2014.
This widening gap is what creates the new opportunity. The combination of a higher hourly rate and an unchanged threshold means an employee aged 22 or over now qualifies by working roughly two days a week (15 hours) across the year – a reduction of 10 hours per week compared to the policy's inception.
Building a Pension Pot from Part-Time Work
For many in low-income or part-time roles, saving for retirement is often sidelined by immediate financial pressures. Standard Life's research underscores this, finding that only 9% of low-income households see pension saving as a priority for the next year, compared to 28% of high-income households.
However, the power of auto-enrolment lies in its ability to build savings steadily, even from modest earnings. An employee on the minimum wage working 15 hours a week could see approximately £818 added to their pension pot in a year through auto-enrolment. This sum is boosted by both valuable tax relief and mandatory employer contributions.
The potential for full-time workers is even greater. Someone working 37.5 hours a week could accumulate around £2,030 annually. Projecting forward, a 22-year-old working full-time on the minimum wage could amass a pension pot worth up to £208,000 in today's money by State Pension age.
The Future of Pension Saving for Vulnerable Groups
Despite auto-enrolment's success, a savings gap persists. Currently, just one in four low-income private sector workers is putting money aside for retirement. Addressing this inadequacy is a key objective for the recently re-established Pension Commission.
The Commission is widely expected to consider further reforms to make auto-enrolment even more inclusive. Potential measures on the table include:
- Reducing the age threshold for eligibility from 22.
- Scrapping the £10,000 minimum earnings limit entirely.
Catherine Foot, Director of the Standard Life Centre for the Future of Retirement, highlighted the dual benefit of the rising wage. "A rising minimum wage not only boosts pension savings through higher contributions on increased salaries, but it also makes auto-enrolment more accessible," she observed.
Foot added, "Although cost of living pressures remain a priority, even a small amount saved to a workplace pension, which is boosted by valuable employer contributions, can make a meaningful difference to future retirement incomes." She noted that the Pension Commission's challenge will be balancing the need to support vulnerable savers with the rising cost of employment for businesses.
