Why Businesses Are Upgrading from Qualifying to Total Earnings

As your business grows, your team’s expectations grow with it – and that includes their benefits. One of the simplest and most meaningful ways to show you value your people is through your workplace pension.

Many employers start out with the qualifying earnings setup. It’s the legal minimum and often the default when you first enrol with a provider like NEST. But more and more growing businesses are now upgrading their pension schemes to include total earnings – creating fairer contributions, easier payroll, and happier teams.

Here’s why the change is worth making.

1. Qualifying Earnings Were Designed for Simplicity, Not Growth

The qualifying earnings approach was created to help small employers meet their auto-enrolment duties. It calculates contributions based only on the portion of salary between two thresholds (£6,240 and £50,270 in 2024/25).

That’s fine for getting started – but as your payroll and workforce evolve, the limits can start to feel restrictive.

• Employees earning above the upper threshold stop receiving contributions on that extra income.
• Anyone earning below the threshold gets less going into their pension.
• Payroll calculations can be fiddly, especially for variable pay or bonuses.

In other words, qualifying earnings meet the rules, but they don’t always meet your ambitions. That’s where total earnings come in – a simpler, fairer approach that grows with your business.

2. Total Earnings Keep Things Simple and Fair

Upgrading to a total earnings pension means every pound of your employees’ pay counts towards their contributions. No lower or upper limits. No bands to calculate. Just simple, transparent pension saving.

For employers:

• Easier payroll setup – fewer calculations and edge cases.
• A clear, consistent contribution model across all roles and pay bands.

For employees:

• Higher contributions and faster-growing pension pots.
• The reassurance that all their pay is helping them save for the future.

By removing thresholds and complexity, total earnings make it easier for employers to do the right thing – and for employees to build stronger savings without lifting a finger.

3. It Sends a Powerful Message to Your Team

Upgrading your pension scheme is about more than numbers. It shows your people that you’re serious about their long-term wellbeing.

For many employees, pensions are the clearest sign of whether their employer truly values them beyond payday. A generous, transparent pension speaks volumes about your culture. Employees notice when a company goes beyond the minimum – and in a competitive job market, that matters.

Not sure what the difference really is between qualifying and total earnings? Our guide to how pensionable earnings work walks you through both in plain English.

Offering a total earnings pension signals that you:

• Care about fair pay and future security.
• Invest in benefits that build trust and loyalty.
• Do the right thing, not just the required thing.

It’s a small change that can have a big impact on retention, morale, and employer brand.

Want to find out how Penfold can help you make the switch? Talk to our team

4. It’s Easier to Switch Than You Think

Many employers assume upgrading their pension scheme will be complex or expensive. In reality, it’s usually straightforward – especially if your provider makes the admin simple.

Here’s what the process looks like:

• Check your provider supports total earnings (Penfold does).
• Talk to payroll to adjust contribution calculations.
• Let employees know what’s changing and how it benefits them.
• Confirm compliance – you’ll exceed the minimum requirements automatically.

That’s it. No big system rebuilds, no complicated paperwork. Just a more generous, future-proof pension setup.

At Penfold, we’ve helped hundreds of businesses make the switch in a matter of days – no disruption, no confusion, just a smoother setup from day one.

5. The Cost Difference Is Smaller Than You Might Think

Yes, contributions will be based on a higher amount of earnings – but for most employers, the difference is modest.

For example, an employee earning £35,000 would have £28,760 pensionable under qualifying earnings versus £35,000 under total earnings – a gap of just over £6,000.

At a 3% employer contribution, that’s only around £15 extra per month – but it means your employee builds a noticeably larger pension over time.

In practice, upgrading to total earnings often costs less than a coffee per employee per week – but delivers a far greater sense of fairness and goodwill.

6. Future-Proofing Your Pension Scheme

Workplace pensions are moving in one direction: more transparency, more generosity, more engagement.

Upgrading now puts your business ahead of the curve and shows regulators, partners, and potential hires that you’re serious about doing things the right way.

It also gives you flexibility – once you’ve switched to total earnings, you can easily adjust contribution levels or introduce salary sacrifice later, without re-certifying your scheme.

Final Thoughts

Upgrading your pension scheme from qualifying to total earnings is one of the simplest ways to build trust and loyalty with your team. It’s a small change in setup – but a big statement about who you are as an employer.

At Penfold, we make switching easy. We’ll help you set up a total earnings scheme that fits your budget, keeps payroll simple, and helps your people save more for their future.

Talk to our team to see how easy it is to upgrade your workplace pension.