Pension calculation advice

WHIRL

Is there anyone who could help advise me if i am working out my pension calculations correctly.

For example if I earn £10,000 per year but my basic was £8000 and the rest is made up of overtime.
This isn’t my actual salary just an example so I know that I am working it out correctly. Just to confirm I no where near exceed the £46,350 per year

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Basic pension I am on now would be as follows

I contribute 5% and my employer contributes 3%

£10,000 - £6032 ( based on qualifying earnings) = £3968

£3968 divided by 12 months = £330.66 per month

My contribution per month £330.66 x 5% = £16.53
My employers contribution per month £330.66 x 3% = £9.91

Total contributions for the month £26.44

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Enhanced pension that I can opt in for

I contribute 5% and my employer contributes 5%

£10,000 per year but basic totals £8000 ( based on basic pay not Qualifying earnings)

£8,000 divided by 12 = £666.66

My contribution per month £666.66 x 5% = £33.33
My employers contribution per month £666.66 x 5% = £33.33

Total contributions for the month £66.66

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Am i roughly working it out correctly or wildly wrong?
Thank you

MallyGirl

If those are the rules your company operates then it seems OK.
I pay 5% to get 10% from employer but they don't deduct that £6032 and if I got paid overtime that would be included too - they would just use my gross salary.

WHIRL

Thank you yes they are the rules as far as i can see on the letter but i was not sure if i was missing anything else out

mgdavid

WHIRL wrote: »

Is there anyone who could help advise me if i am working out my pension calculations correctly.

For example if I earn £10,000 per year but my basic was £8000 and the rest is made up of overtime.
.............

then surely the pension contribution is based on the £8000 basic salary. Your monthly contrib would be 33.33 and employer 20.00 so total 53.33.

I don't see where the £6032 you deducted came from?


Yes the 2nd part of your example looks OK.

Paul_Herring

I don't see where the £6032 you deducted came from?

It's the earnings that aren't counted as pensionable (and thus omitted from the percentage calculation) for stingy employers.

The upper figure for these employers is £46,350.

https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/9-knowing-your-clients-ongoing-duties/automatic-enrolment-earnings-threshold

WHIRL

Yes in my letter it states the contributions that the company and myself are based on the qualifying earnings that the government decide on each year. Thank you for your replies it all helps me to understand it all

mgdavid

Paul_Herring wrote: »

It's the earnings that aren't counted as pensionable (and thus omitted from the percentage calculation) for stingy employers.

The upper figure for these employers is £46,350.

https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/9-knowing-your-clients-ongoing-duties/automatic-enrolment-earnings-threshold

Good grief, that's absolutely disgusting - whose bright idea was that and how ever did they get away with it?
I can understand a lower earnings threshold below which the employer doesn't have to enrol or pay contribs at all (due to high levels of admin for part-time workers) but would expect once the threshold is met the entire salary is pensionable pay.

Paul_Herring

but would expect once the threshold is met the entire salary is pensionable pay.

For more enlightened employers, it is.

However do note, that for the aforementioned (stingy) employers, bonuses, commission and overtime may also be omitted from the calculation.

https://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay

(There are caveats there to stop them getting away with absolute murder, but like most tax-related things they're absolutely more complicated than they need to be.)