Understanding pension contributions on pay slip?

Asghar

Hi there,

My wife, working part-time has recently been enrolled into the Local Government Pension.
I can see that around 5.5% is coming out of her gross pay each month with a total now of £65 for this tax year.
Is "Ers pension TP" the employer contribution because it seems quite high in relation to her monthly wage and the "Ers pension YTD" must be the total contributions for this tax year.



We don't understand these figures, is it because the Local Government Pension doesn't actually save into an individual pot of money?

jamesd

Yes, ers means employers.

AlanP_2

What the employer pays into the LGPS will be a great deal more than the employee does but whatever it is makes no difference to your wife's pension.

The employer rate, at its simplest, is the %'age of overall salary costs that the scheme actuaries estimate will be needed to fund ALL future pensions they are committed to - no direct link to your wife's individual entitlement.

I'm sure "under the hood" it is more complicated than that.

hyubh

Asghar wrote: »

We don't understand these figures, is it because the Local Government Pension doesn't actually save into an individual pot of money?

It's a DB not DC scheme, so there are no 'individual pots of money'. An employer rate of 28% isn't unusual, though whatever it is isn't material to your wife, as AlanP says.

Asghar

Thanks for all the replies.

I guessed it wasn't her own pot of money but just confused why the figures where on the payslip and the seemingly high amounts.
Makes sense now and her pension will just be worked out on the number of years paid in linked to her finally salary.

hyubh

Asghar wrote: »

Makes sense now and her pension will just be worked out on the number of years paid in linked to her finally salary.

Not quite - the LGPS is a CARE ('career average revalued earnings') scheme now - she will get 1/49th of her pensionable pay for each year of membership, uprated for CPI, as an annual pension.

http://lgps2014.org/content/pension-accounts-2

greenglide

linked to her finally salary.

The LGPS is no longer a final salary scheme, it is a career average scheme.

It is still a DB scheme with each year standing on its own and increased by CPI until you reach pension age. This can actually e better than the salary link if wage rises are less than CPI - there are no promotions etc.

Silvertabby

It looks like your wife's salary is so low neither she nor her employer has to pay NI contributions. Does she get NI credits from another source? Otherwise she isn't building up her entitlement to her State pension.

xylophone

Re NI and low earners

http://www.litrg.org.uk/tax-guides/employed/what-national-insurance-do-i-pay-employee

https://www.gov.uk/national-insurance-credits/overview

Asghar

Thanks for all the replies.

I had been trying to find out what constitutes a full year of membership in the scheme. She was enrolled in her September 2016 payslip and I had initially thought that September this year would complete one year.

I emailed them on Monday, it's now Friday without a reply.
However, since looking at their website, it states that the scheme year runs from 1 April to 31 March, so what happens to the money paid in the part of the year before the start?

Silvertabby wrote: »

It looks like your wife's salary is so low neither she nor her employer has to pay NI contributions. Does she get NI credits from another source? Otherwise she isn't building up her entitlement to her State pension.

Yeah, she's only working part-time and there's no other source of NI credits at the moment.
She has built up 26 years worth of credits in the past and we may look to buy more in the near future.

Silvertabby

I had been trying to find out what constitutes a full year of membership in the scheme. She was enrolled in her September 2016 payslip and I had initially thought that September this year would complete one year.

I emailed them on Monday, it's now Friday without a reply.
However, since looking at their website, it states that the scheme year runs from 1 April to 31 March, so what happens to the money paid in the part of the year before the start?

In your wife's case, she will complete her first full year of membership 365 days after she started her job.

Her pension record will be:

Year 1 = XX Sep 2016 to 31 March 2017
Year 2 = 1 April 2017 to 31 March 2018
Year 3 = 1 April 2018 to 31 March 2019
etc etc
Year she leaves = 1 April XX to date of leaving

It has to be split this way because the annual revaluation is added as at 31 March each year, so she will get a pro rata revaluation for year 1, a full year for year 2 etc etc

Don't worry - she hasn't lost any pension.

Yeah, she's only working part-time and there's no other source of NI credits at the moment.
She has built up 26 years worth of credits in the past and we may look to buy more in the near future.

Could she increase her hours so she does pay NI?