Auto-enrolment pension duties for overseas employers
One of the most common assumptions overseas employers make is that, because the company sits abroad, UK workplace-pension rules don't apply. In most cases they do. If you employ someone who works in the UK, you almost certainly have auto-enrolment duties — even with no UK entity, branch or office. Here's what that means in practice for 2026/27.
What auto-enrolment actually is
Auto-enrolment is the legal duty on UK employers to put eligible staff into a workplace pension scheme and pay contributions into it. It is overseen by The Pensions Regulator, not HMRC, and it sits alongside your PAYE obligations rather than inside them. The key point for overseas employers: the duty follows the worker, not the location of the company. If the person ordinarily works in the UK, the rules generally bite — regardless of where you are based or how you run their payroll.
In one sentence: if you employ someone who ordinarily works in the UK, you are very likely a UK employer for auto-enrolment purposes — even with no UK presence and even when you pay them through a DPNI scheme.
Who has to be enrolled?
Not every worker is automatically enrolled. The test turns on age and earnings. For 2026/27 a worker must be automatically enrolled if they are:
- aged between 22 and State Pension age; and
- earning more than the earnings trigger of £10,000 a year (the equivalent pro-rated figure applies for weekly or monthly pay); and
- working, or ordinarily working, in the UK.
Workers who fall outside those thresholds — for example someone aged 16 to 21, or earning below £10,000 — still have rights. They can ask to opt in, and in some cases you must still contribute. So "they earn under the trigger" is not the end of the question.
How much you have to pay
The legal minimum total contribution is 8% of qualifying earnings, of which the employer must pay at least 3%. The remaining 5% is the employee's share (part of which is effectively funded by tax relief). Qualifying earnings for 2026/27 are the slice of pay between £6,240 and £50,270 a year.
So for a UK employee on £40,000, the employer's 3% minimum is roughly 3% of (£40,000 capped at £50,270, less £6,240), which is about £1,013 a year. Many employers choose to contribute more than the minimum to stay competitive, but 3% is the floor.
| Element | 2026/27 figure |
|---|---|
| Earnings trigger (enrolment) | £10,000 a year |
| Qualifying earnings band | £6,240 – £50,270 |
| Minimum total contribution | 8% of qualifying earnings |
| Minimum employer share | 3% of qualifying earnings |
The duties beyond paying in
Auto-enrolment is not just a payment; it is a set of ongoing administrative duties. As an employer you must:
- Assess every worker each pay period to see who needs enrolling.
- Set up a qualifying pension scheme and enrol eligible staff into it.
- Write to your staff explaining how auto-enrolment affects them, within strict deadlines.
- Process opt-outs and opt-ins correctly, refunding contributions where someone opts out in time.
- Re-enrol eligible staff who previously opted out, roughly every three years.
- Complete a declaration of compliance with The Pensions Regulator, and keep records.
Missing these is where penalties arise. The Pensions Regulator can issue fixed and escalating fines for employers who don't meet their duties, and being based overseas is not a defence.
Watch out: the duty to assess and enrol can apply from the very first payday. There's no grace period simply for being a new or foreign employer, so the pension scheme ideally needs to be ready before your UK employee's first pay run.
Can an overseas employer set up a UK pension scheme?
Yes. Several UK master-trust pension providers accept employers without a UK bank account or UK entity, and the contributions are made as part of each payroll run alongside tax and National Insurance. The practical challenge is usually choosing a scheme that will onboard an overseas employer smoothly and getting the assessment right each period — which is exactly the sort of detail that benefits from someone handling it for you.
How it fits with a DPNI scheme
Auto-enrolment and your DPNI scheme are separate obligations that run in parallel. The DPNI scheme handles Income Tax and National Insurance; auto-enrolment handles the pension. Both need to be in place for a fully compliant UK hire, and both are assessed every pay period. Treating them as one joined-up payroll is the simplest way to avoid gaps.
Frequently asked questions
We're based abroad — are we really caught by UK pension rules?
Almost certainly, if your employee ordinarily works in the UK. The duty attaches to UK-based workers, not to UK-based companies.
What if our employee wants to opt out?
They can, but only after they've been enrolled — you can't agree to skip enrolment in advance. If they opt out within the opt-out window, their contributions are refunded.
Do we pay employer pension contributions on the whole salary?
No — contributions are calculated on qualifying earnings (the £6,240 to £50,270 band for 2026/27), not the full salary, unless you choose a more generous basis.
Want pensions handled as part of your UK payroll?
We assess your UK staff each pay period, run a compliant workplace pension alongside your DPNI scheme, and keep you on the right side of The Pensions Regulator — with transparent, published pricing.
Get startedThis guide is general information, not pensions, tax or legal advice, and reflects our understanding of the rules as at June 2026. Auto-enrolment thresholds are reviewed annually and your circumstances may differ — please get specific advice before acting.