Employer contribution on commission

Ben987

Hi all,

New here Had a look around for the answer on this one, but couldn't seem to find it on the fourms. I've searched the DWP site too but no luck.

I recently started paying into my private pension with work (currently with Standard Life).

My wage is made up of £12,000 basic per annum with the vast majority coming from commission.

I noted that when my pension was taken (5% for myself), the percentage was only taken off my monthly basic, and not off any commission earnt (ie. £1000 monthly basic, not £2500 total wage inc. commission). Obviously this means that my pension deduction was a huge amount less than I expected it to be. I know I can increase my percentage, however my work only match up to 3%.

Can I raise this with them and ask them to deduct on my total monthly wage, basic and commission inclusive, and ask them to match 3% on the total, or are they entitled to only pay out on my measly basic each month?

Any help/advice would be greatly appreciated. Again, apologies if this has been asked time and time before but I couldn't find anything

hugheskevi

Can I raise this with them and ask them to deduct on my total monthly wage, basic and commission inclusive, and ask them to match 3% on the total, or are they entitled to only pay out on my measly basic each month?

Your pension arrangements are a contractual agreement between yourself and your employer, and the company is free to only make basic pay pensionable if that is what they wish to do - in fact, that is a common arrangement. Same as they are free not to offer any pension contributions at all if that is what they want to do.

Once the new employer pension duties come into force, starting from October 2012, there will be new rules around how much of total remuneration has to count for pension purposes (but only in terms of ensuring employers meet the minimum requirements - they have a variety of ways in which they can ensure they do), but those don't apply at the moment.

jamesd

Paying in enough to get the full employer match is good. Paying in more might be better done into a stocks and shares ISA instead, depending on your current age, desire for early retirement (either before 55 or before state pension age), your income needs in retirement and your commitment to saving and current savings levels.

Debt_Free_Chick

ben987 wrote: »

I noted that when my pension was taken (5% for myself), the percentage was only taken off my monthly basic, and not off any commission earnt (ie. £1000 monthly basic, not £2500 total wage inc. commission). Obviously this means that my pension deduction was a huge amount less than I expected it to be. I know I can increase my percentage, however my work only match up to 3%.

Can I raise this with them and ask them to deduct on my total monthly wage, basic and commission inclusive, and ask them to match 3% on the total, or are they entitled to only pay out on my measly basic each month?

If the employer's normal contribution is only applied to basic pay, it could be that the payroll system is set up to use that amount (basic pay) for all contributions.

It ought to be relatively straightforward to ask if your personal contributions can be applied to total pay, but it really depends on how the payroll system is set up. But ask them (nicely).

If they can't use total pay, you could increase the percentage of basic pay you contribute. If, for example, your total pay is generally double your basic pay, then double the contribution rate to 10% of basic pay. If it's only half as much again (i.e. 150%) then scale your contribution up to 7.5% of basic pay .... and so on.

HTH