New Job - Auto Enrolment contributions

TheMilkmansDad

Hi All,

Very quick question as I feel I'm being a bit thick on this one!

I've started a new job and my employers have now deducted the expected 5% from my salary and their 3% contribution seems a bit short.  I've asked the question and they came back with:

With regards to your pension contribution, no deductions are taken from the first £480 you earn in a 4 weekly period. Your employee contributions are 5% and your employer contributes 3%.

Am I being a bit dumb here, in my previous workplace they deducted the flat percentages whereas the new one seems use the salary less £480 method? Is this legitimate? I'm sure it is as I'm sure this would have been raised sooner, but I do not understand! The Gov website merely sates you don't have to contribute if you earn less than this in a 4 week period - no other mention. Is the wording ambiguous or is it just my misunderstanding?

Thanks in advance.

Dazed_and_C0nfused

Perfectly legit.  Although not very generous.

You can always set your % higher to counteract it.

https://www.thepensionsregulator.gov.uk/en/employers/new-employers/im-an-employer-who-has-to-provide-a-pension/declare-your-compliance/ongoing-duties-for-employers-/earnings-thresholds

Marcon

TheMilkmansDad said:

Hi All,

Very quick question as I feel I'm being a bit thick on this one!

I've started a new job and my employers have now deducted the expected 5% from my salary and their 3% contribution seems a bit short.  I've asked the question and they came back with:

With regards to your pension contribution, no deductions are taken from the first £480 you earn in a 4 weekly period. Your employee contributions are 5% and your employer contributes 3%.

Am I being a bit dumb here, in my previous workplace they deducted the flat percentages whereas the new one seems use the salary less £480 method? Is this legitimate? I'm sure it is as I'm sure this would have been raised sooner, but I do not understand! The Gov website merely sates you don't have to contribute if you earn less than this in a 4 week period - no other mention. Is the wording ambiguous or is it just my misunderstanding?

Thanks in advance.

Yes, it's entirely legitimate. There's an explanation here which will help clarify: https://www.nestpensions.org.uk/schemeweb/helpcentre/contributions/calculating-contributions/calculate-contributions-using-qualifying-earnings.html

penners324

Qualifying earnings is the term. 

TheMilkmansDad

Thanks for this.

Bit of a learning curve for me, as I was expecting it to be a flat 5/3 that is what I'd used as my workings when taking into consideration of the Salary package. Lesson learnt.

What a set of tight !!!!!!, guess that's to be expected with US based companies! Will have to reconsider whether I get looking again or stick it out. I aren't massively concerned with the value package - it's more or the principal or it.

Marcon

TheMilkmansDad said:

Thanks for this.

Bit of a learning curve for me, as I was expecting it to be a flat 5/3 that is what I'd used as my workings when taking into consideration of the Salary package. Lesson learnt.

What a set of tight !!!!!!, guess that's to be expected with US based companies! Will have to reconsider whether I get looking again or stick it out. I aren't massively concerned with the value package - it's more or the principal or it.

Completely understand your reaction, but look again at the overall package. You say you aren't 'massively concerned with the value' but if you're getting a higher salary, better holidays, possibly bigger bonus or other perks, don't let one 'negative' demotivate you so instantly and completely. US based companies often don't 'get' UK pensions, so beware huffing about a principle and shooting yourself in the foot!

Somebody

Tight so and so's indeed!  I only came across qualifying earnings when my youngest started his job which had lower pension conts than "expected".  His brother meanwhile salary sacrifices 5% in exchange for his employer's 17.5% on the whole lot.

Marcon

Somebody said:

Tight so and so's indeed!  I only came across qualifying earnings when my youngest started his job which had lower pension conts than "expected".  His brother meanwhile salary sacrifices 5% in exchange for his employer's 17.5% on the whole lot.

...and how does the rest of the benefit package compare overall...?

Rich1976

Not just US Companies. My previous employer didn’t offer a pension of any sort until they were forced to in around 2012 and when they did it was set up along the same lines as yours.

very tight fisted when the salary being paid ( in my case ) was way below the national average it just made the pension contributions a pittance.

Somebody

Marcon said:

Somebody said:

Tight so and so's indeed!  I only came across qualifying earnings when my youngest started his job which had lower pension conts than "expected".  His brother meanwhile salary sacrifices 5% in exchange for his employer's 17.5% on the whole lot.

...and how does the rest of the benefit package compare overall...?

No other benefits, apart from all travel costs being reimbursed, on top of an annual rail season ticket.  He also gets a £3,600 tax free bonus under some sort of employee ownership "qualifying bonus payment".

BlackKnightMonty

Isn’t this the general employment trend; less and less perks, packages stripped down to the minimum?