Extra employer contributions (all employers, a modelled year)
IFS package, Great Britain private-sector employees
£5bn a year, a modelled year at 2025 earnings, not a forecast for a particular year, 2025 prices (ledger C-A24-EMPLOYER)
recurring; price year not stated; A modelled year at 2025 earnings; Modelled cost
Read from the ledger. Likely to be passed on to employees through slower pay growth.
Source: Institute for Fiscal Studies / abrdn Financial Fairness Trust, The Pensions Review: final recommendations (Table 4.1)
Extra employee contributions (all employees, a modelled year)
Current defined contribution savers
£6bn a year, a modelled year at 2025 earnings, not a forecast for a particular year, 2025 prices (ledger C-A24-EMPLOYEE)
recurring; price year not stated; A modelled year at 2025 earnings; Modelled cost
Source: Institute for Fiscal Studies / abrdn Financial Fairness Trust, The Pensions Review: final recommendations (Table 4.1)
Upfront tax relief on the extra contributions (Exchequer)
Income tax and NICs forgone in the short run
up to £3.7bn a year, a modelled year at 2025 earnings; falls to at most £2.1bn in the long run, 2025 prices (ledger C-A24-RELIEF)
recurring; price year not stated; Short run; falls to at most £2.1bn a year in the long run; Modelled cost
An upper bound assuming full pass-through and no salary sacrifice; not realised until the phase-in starts.
Source: Institute for Fiscal Studies / abrdn Financial Fairness Trust, The Pensions Review: final recommendations (Table 4.1)
Worked example, part-time earner on £8,000: employer contribution
One employee a year, minimum contributions, 2026–27 thresholds
£240 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
New: 3% of £8,000. Today nothing unless the employee opts in. No default employee contribution (the default total is 3% of earnings below £10,000).
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, low earner on £15,000: extra employer contribution
One employee a year, minimum contributions, 2026–27 thresholds
£187.2 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £262.80 to £450 (3% from the first pound instead of above £6,240).
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, low earner on £15,000: change in default employee contribution
One employee a year, minimum contributions, 2026–27 thresholds
£-18 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £438 to £420: the default total rises from £700.80 to £870, but the employer pays more of it.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, low earner on £15,000: change in income tax relief (Exchequer)
One employee a year, minimum contributions, 2026–27 thresholds
£-3.6 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
Relief at 20% on an £18 smaller employee contribution.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27); GOV.UK (HM Revenue and Customs), Income Tax rates and Personal Allowances (Current rates and allowances); GOV.UK (HM Revenue and Customs), Tax on your private pension contributions: tax relief (Tax relief)
Worked example, middle earner on £35,000: extra employer contribution
One employee a year, minimum contributions, 2026–27 thresholds
£187.2 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £862.80 to £1,050.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, middle earner on £35,000: extra default employee contribution
One employee a year, minimum contributions, 2026–27 thresholds
£382 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £1,438 to £1,820; total from £2,300.80 to £2,870, matching the IFS’s own example (about £570 more). Net of 20% relief the take-home cost is about £306.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, middle earner on £35,000: extra income tax relief (Exchequer)
One employee a year, minimum contributions, 2026–27 thresholds
£76.4 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
20% of £382.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27); GOV.UK (HM Revenue and Customs), Income Tax rates and Personal Allowances (Current rates and allowances); GOV.UK (HM Revenue and Customs), Tax on your private pension contributions: tax relief (Tax relief)
Worked example, higher earner on £60,000: extra employer contribution
One employee a year, minimum contributions, 2026–27 thresholds
£187.2 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £1,320.90 to £1,508.10 (employer contribution still capped at £50,270).
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, higher earner on £60,000: extra default employee contribution
One employee a year, minimum contributions, 2026–27 thresholds
£1,660.4 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
From £2,201.50 to £3,861.90; total from £3,522.40 to £5,370. Net of 40% relief the take-home cost is about £996, if higher-rate relief is given or claimed.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27)
Worked example, higher earner on £60,000: extra income tax relief (Exchequer)
One employee a year, minimum contributions, 2026–27 thresholds
£664.16 per employee a year
recurring; 2026–27 cash (thresholds held at 2025–26 values) prices; Each year once fully phased in; Modelled cost
40% of £1,660.40.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed pp.33–34 (rules); p.12 (the £35,000 example)); Department for Work and Pensions, Review of the Automatic Enrolment Earnings Trigger and Qualifying Earnings Band for 2026/27 (Thresholds for 2026–27); GOV.UK (HM Revenue and Customs), Income Tax rates and Personal Allowances (Current rates and allowances); GOV.UK (HM Revenue and Customs), Tax on your private pension contributions: tax relief (Tax relief)
Employer and payroll administration for the new triggers
All employers, one-off and running
Not yet established per employer
mixed; price year not stated; From announcement to full phase-in; Not yet established
IFS expects it to be much lower than the original roll-out of automatic enrolment but does not cost it.
Source: Institute for Fiscal Studies (in partnership with abrdn Financial Fairness Trust), The Pensions Review: final recommendations (full report, PDF) (Printed p.57)