Workplace pensions
What you, your employer and the government pay
The amount you and your employer pay towards the pension depends on:
- what type of workplace pension scheme you鈥檙e in
- whether you鈥檝e been automatically enrolled in a workplace pension or you鈥檝e joined one voluntarily (鈥榦pted in鈥�)
Example
You鈥檙e in a defined contribution pension scheme. Each payday:
- you put in 拢40
- your employer puts in 拢30
- you get 拢10 tax relief
A total of 拢80 goes into your pension.
Use to work out how much you and your employer will put in.
Tax relief
The government will usually add money to your workplace pension in the form of tax relief if both of the following apply:
- you pay Income Tax
- you pay into a personal pension or workplace pension
Even if you do not pay Income Tax, you鈥檒l still get an additional payment if your pension scheme uses 鈥榬elief at source鈥� to add money to your pension pot.
If you鈥檝e been automatically enrolled
You and your employer must pay a percentage of your earnings into your workplace pension scheme.
How much you pay and what counts as earnings depend on the pension scheme your employer has chosen. Ask your employer about your pension scheme rules.
In most automatic enrolment schemes, you鈥檒l make contributions based on your total earnings between 拢6,240 and 拢50,270 a year before tax.聽Your total earnings include:
- salary or wages
- bonuses and commission
- overtime
- statutory sick pay
- statutory maternity, paternity or adoption pay
Workplace pension contributions
| The minimum your employer pays | You pay | Total minimum contribution | |
|---|---|---|---|
| From April 2019 | 3% | 5% | 8% |
These amounts could be higher for you or your employer because of your pension scheme rules. They鈥檙e higher for most defined benefit pension schemes.
In some schemes, your employer has the option to pay in more than the legal minimum. In these schemes, you can pay in less as long as your employer puts in enough to meet the total minimum contribution.
If you鈥檝e voluntarily enrolled in a workplace pension
Your employer must contribute the minimum amount if you earn more than:
- 拢520 a month
- 拢120 a week
- 拢480 over 4 weeks
They do not have to contribute anything if you earn these amounts or less.
How your take-home pay changes
Joining a workplace pension scheme means that your take-home income will be reduced. But this may:
- mean you鈥檙e entitled to tax credits or an increase in the amount of tax credits you get (although you may not get this until the next tax year)
- mean you鈥檙e entitled to an income-related benefit or an increase in the amount of benefit you get
- reduce the amount of student loan repayments you need to make
Payments using salary sacrifice
You and your employer may agree to use 鈥榮alary sacrifice鈥� (sometimes known as a 鈥楽MART鈥� scheme).
If you do this, you give up part of your salary and your employer pays this straight into your pension. In some cases, this will mean you and your employer pay less tax and National Insurance.
Ask your employer if they use salary sacrifice.