Help understanding my pension deductions

patchyX2

I'm struggling to work out what my take home pay should be in my new job, and I think it's the pension deductions that are muddying the water.

My employer offers an auto-enrolment pension where they contribute 4%, and I requested to increase my contributions to 8%. I'm a PAYE employee, my salary is 70k and my tax code is 1084L. My employer doesn't offer salary sacrifice. I don't have a student loan.  A snippet of my payslip is below.

The £233.33 employer contribution is 4% of my gross monthly salary, and my £466.67 contribution is 8% of my gross monthly salary, which sounds right, but when I plumb the figures into the salary calculator website and choose the auto enrolment pension option, it thinks my pension deductions should only be £293.53 and I should only be paying  £1226.25 tax. It agrees with the NI deduction figure though.

Any ideas what's going on?

Dazed_and_C0nfused

You cannot use a calculator like that without understanding the method used for the pension contributions.

Are they net pay or relief at source?

NoMore

Also lots of calculators assume for auto enrolment that the employer only bases the %contribution on the qualifying earnings (between £6240 and £50270) so that could also explain a discrepancy

Albermarle

Are your contributions coming out of gross pay ( net pay arrangement) or taxed pay ( relief at source arrangement). It is not clear from the payslip 

patchyX2

Thanks for the responses.

I'm not sure on whether it's net pay or relief at source.  I have some paperwork from the pension provider (The People's Pension) which states "Your employer deducts your contributions after tax is calculated on your wages" which would indicate that it's a relief at source method. BUT.... my employer contributions are 4% and mine are 8%. 4% of my gross salary is £233.33, and 8% is £466.67 which are the figures on the payslip, which to me sounds like it's a net pay arrangement (as the % is taken from my gross salary, not 4/8% of my gross salary after tax has been taken off).

  

molerat

You are being taxed on the total gross pay - tax on £5833.33 at 1084L is £1343 - so your pension is relief at source, 25% will be added by the provider.  Is your tax code suffixed with X or M1 as the tax deducted does not seem quite right for a cumulative code if you have had exactly the same gross pay each month.

patchyX2

molerat said:

You are being taxed on the total gross pay - tax on £5833.33 at 1084L is £1343 - so your pension is relief at source, 25% will be added by the provider.  Is your tax code suffixed with X or M1 as the tax deducted does not seem quite right for a cumulative code if you have had exactly the same gross pay each month.

Thanks for clarifying.

No, there's no X or M1 or any other letters in my tax code. My salary has changed several times since the start of the tax year, and we got a one-off cost of living bonus last month. My tax code was also changed (from 1257L to 1084L) a few months ago, so my income has been quite up and down, hence me trying to find out what my 'normal' take home amount will be.

Going back to the salary calculator I linked in my my post, if I edit the pension type to be 'Personal' rather than 'Auto-enrolment', and set the 8% to be based on my gross salary, then all the numbers line up

NoMore

PledgeX2 said:

Going back to the salary calculator I linked in my my post, if I edit the pension type to be 'Personal' rather than 'Auto-enrolment', and set the 8% to be based on my gross salary, then all the numbers line up

So its likely to be down to what I said in post #3, calculator is using qualifying earnings, your employee is using actual earnings