Would like my pay rise to go in to my WPP.

Not_Me_Officer

We recently had a rise which I'd like to go in to my workplace pension, I just don't know how to work out what that'd need to be.


We were paid £7.5/hr for 40hrs & £9.37 after that. Our weekly work would vary but anything between say 50-62hrs with the usual perhaps around 58hrs.


Our pay has gone to £8/hr for 40 & £10/hr after that.


I had been paying in 4% instead of the 1% minimum.


What would I need to increase that contribution to for the pay rise to go in to the pension? Could you please show your workings out in the event we get another pay rise some day & I can try work it out in the future. Thank you.

JoeCrystal

Here is how I would work it out. Others might calculate it differently though.

Income at £7.5/hr: Weekly (x40) = £300 Yearly (then x52) = £15,600
Pension Contribution is 4% for Income at £7.5/hr: is £15,600*0.04 = £624 for the year.

Income at £8/hr Weekly = £320 Yearly = £16,640
Difference in Yearly Income: £16,640 - £15.600 = £1,040

Add the difference on top of your current pension contribution: £624+£1040 = £1664
Divide the difference by the new yearly income: £1,664/£16,640 = 0.1
Multiply the amount by 100 to get the percentage = 0.1* 100 = 10%

Not_Me_Officer

Thanks for that.


So basically I've had a 10% pay rise? Have I understood that correctly? I didn't think I'd get such a rise.


So I would now need to pay in 14% to pay in the pay rise? (was paying in 4%, pay rise of 10% = 14%?)


I think I've surely misunderstood somewhere along the line. That's quite a hike.

JoeCrystal

No, you only need to pay in 10% in total, not 14% in order to pay the pay-rise on top into a pension. According to your post, you want to put your entire pay-rise into a pension scheme on top of your original pension contribution. I thought this meant you do not want to see any increase in your net pay with your pay-rise going into a pension.

If I ran the percentage into Listentotaxman I get the following amount:
income: £15,600, 4% go into pension, Net: £13,276.00 (£624 into pension)
Income: £16,640, 10% go into pension, Net: £13,151.20 (£1,664 into pension)

Although I noticed that if you put in 9%, you get following amounts which do take into account of taxes/NI:
Income: £16,640, 9% goes into the pension, Net: £13,284.32 (£1,497.60 into pension).

Anyway, have a play with the calculator and see which amount you are most comfortable with paying the pension into.

Hope this makes sense.

Not_Me_Officer

JoeCrystal wrote: »

I thought this meant you do not want to see any increase in your net pay with your pay-rise going into a pension.

Yes that's correct. I must've just not understood properly, sorry.


Thanks for the link though. I'll have a play with that.


I find it interesting you never included overtime. While many think overtime isn't guaranteed, out of 52 weeks - 4 weeks holiday leaving 48 weeks left I will do 48 weeks which have some level of overtime in them, anything between 10-25 hours overtime, but it's always guaranteed.

JoeCrystal

Well, the reason why I left out overtime is partly due to unpredictable range of amount of overtime. Still, I can give it a go. Btw, looking at the hourly rate, you had 6% pay-rise overall.

If we assume that only 10 hours for 48 weeks is done, this make up the following income:
Old Income: £20,097.60 (4% of it is £803.90 for a pension)
New Income: £21,440.00
Difference between two incomes is £1,342.40
£803.90+£1,342.40 = £2,146.30 pension contribution = 10% of the salary

If we assume that only 25 hours for 48 weeks is done, this make up the following income:
Old Income: £26,844.00 (4% of it is £1073.76 for a pension)
New Income: £28,640.00
Difference between two incomes is £1,796.00
£1073.76+£1,796.00 = £2,869.76 pension contribution = 10% of the salary