How to calculate my WSS pension contributions

Cmdr_Bond

I've recently been forced to change employer.  I've actually been very fortunate in how things have turned out, but it means a change in my pension contributions.

To my knowledge, the scheme I was in with my old employer was the same as it was when I joined 14 years ago.  In this, I put in 3% of my BASIC wage, and the company put in an extra 6%.  I was also making an extra 6% in AVCs to bring it up to 15% as I started paying in when I was 29.

I've now been with my new employer for 3 months and have been auto-enrolled.

Firstly, I'll quote from our companies scheme.

Workplace Savings Section (WSS)

New members of the WSS pension make a salary sacrifice of 5%, and the Company will pay 3%. After a year's pensionable service, a member may choose to increase the salary sacrifice by a further 1% or 2%, which is also matched by the Company.

After a year's pensionable service, you can also choose to make Additional Voluntary Contributions, up to the annual limit set by the government. These are not matched by the Company.

So, I'm now paying 5% instead of 3%, and the company is paying 3% instead of 6%, and I can't make AVCs for another 12 months.  However, in 12 months I can increase to 7% and the company will increase to 5%, and I can make additional contributions on top  

So far, so good.

The 5% up to 7% is salary sacrifice (previously my 3% plus additional 6% were not), and this is where I start to get confused.

If I understand it correctly, my wage is reduced by 5%, and that is then put into my pension pot.

But I can't make the maths work based on the payslips I have access to.

Here's 2 examples.

Pay £1,101.44
Gross for tax £1,059.09
WSS-SmEE -£42.35
WSS-ER £25.41

Pay £710.20
Gross for tax 680.69
WSS-SmEE £29.51
WSS-ER £17.71

I'm guessing that the abbreviation on my payslip WSS-SmEE means it's the "SMART" version of the scheme, which could explain why my maths are not adding up.

In those above 2 examples above, neither total 5% or 3%, they're both less.

If SMART I guess I have to do tax calculations as well ...

Ideas?

JoeCrystal

Is it possible you try to base the contribution percentage on whole income rather than discounting the first £520 of the month? That might explain the difference?

Cmdr_Bond

Sorry, I don't follow.

What's this about discounting the first £520 of the month?  Where does that come from?

Note, I'm weekly paid and these are the first payments into the scheme 

Mrnkar_2

May be that the pension percentage amounts are taken from your gross pay minus tax.
My hubby's is calculated that way.

Dazed_and_C0nfused

Cmdr_Bond said:

Sorry, I don't follow.

What's this about discounting the first £520 of the month?  Where does that come from?

Note, I'm weekly paid and these are the first payments into the scheme 

With auto enrolment employers are able to ignore the first part of your earnings for pension contribution purposes so you may want to increase your sacrifice % to counter this.

The first £120 can be ignored for people paid weekly (not all employers do this).

https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/automatic-enrolment-earnings-threshold

Cmdr_Bond

Thanks, I'll look at the numbers again on my break.

MX5huggy

Cmdr_Bond said:

Sorry, I don't follow.

What's this about discounting the first £520 of the month?  Where does that come from?

Note, I'm weekly paid and these are the first payments into the scheme 

The first £6240 of annual salary (so £520 monthly) can be disregarded for pension if the company wishes. Many don’t it’s a bit of a tight fisted thing. But work your numbers back with this, it probably explains it. 

Cmdr_Bond

Haven't had chance to look at the main numbers, but the ratio of employer to employee seems correct.

If I divide EE by 5 and multiply by 3 I get the ER amount, and vice versa if I divide the ER by 3 and multiply by 5, I get the EE.

So it's just a case of working out what figure they're taking the b3% and 5% from.

MX5huggy

It’s 5 & 3% of £590 which is £710 minus £120. £120 being 1 weeks disregarded salary for pension (£6240 / 52). 

I am surprised that Secret Agents are paid weekly. 

QrizB

MX5huggy said:

I am surprised that Secret Agents are paid weekly. 

They can't be sure they'll stay employed for a whole month

Cmdr_Bond

MX5huggy said:

It’s 5 & 3% of £590 which is £710 minus £120. £120 being 1 weeks disregarded salary for pension (£6240 / 52). 

I am surprised that Secret Agents are paid weekly. 

Ok, that makes sense (but isn't mentioned in the company literature that I've seen)

My question then, is, is there an upper limit?

So from what you've posted above, I'm assuming it's based on whole £s only, which isn't an issue.

And the £710 wage works based on what you've said.

But the £1,101 doesn't.

5% of £1,101 is £49.05, but the contribution is £42.35

Which, working backwards, lots 100% at £847 (42.35÷5×100).  Add the £120 to that and we're at £967, not £1,101.