Employer contributions when leaving job during tax year

aroominyork

I am about to leave a job where employer pension contributions at 10% of salary were based on earnings between £6,240 and £50,270 a year. My salary was £58,800 so the employer’s monthly contributions were capped at (50270-6240)/12*10% = £366.90. My leaving date is likely to be 31 January when my earnings for the ten months of the tax year will be £49,000. My question is whether a top-up contribution will be made so that, instead of employer contributions of 10*£366.90 = £3669, they should adjusted to (49000-6240)*10% = £4276?

FIREDreamer

aroominyork said:

I am about to leave a job where employer pension contributions at 10% of salary were based on earnings between £6,240 and £50,270 a year. My salary was £58,800 so the employer’s monthly contributions were capped at (50270-6240)/12*10% = £366.90. My leaving date is likely to be 31 January when my earnings for the ten months of the tax year will be £49,000. My question is whether a top-up contribution will be made so that, instead of employer contributions of 10*£366.90 = £3669, they should adjusted to (49000-6240)*10% = £4276?

I very much doubt it.

tizerbelle

No. Pension contributions are calculated at the point of deduction. 

aroominyork

tizerbelle said:

No. Pension contributions are calculated at the point of deduction. 

So would the final payment assume I would be paid £4900 in M11 and M12 even though I wouldn't, or would it take into account that I would not breach the cap and so would contribute more than £366.90 for each of the three notice months?

tizerbelle

No. Pension contributions are calculated each pay period based on pensionable earnings in that period alone.

For qualifying earning (where your scheme uses it) the first £6240 you earn in a year is not pensionable but this is applied on the basis of pay period thresholds - so if paid weekly the first £120, if paid monthly the first £520 isn't pensionable.  You don't get to use the whole annual allowance if you aren't in that pension scheme for the full year.   

tizerbelle

Another way to think about is that over the period of a full year, £44,030 is the maximum pensionable pay available (based on £50,270-£6,240).  

You aren't in the scheme for a full year though just 10 months so your pensionable pay is pro-rated to 10/12ths of that figure which is £36,690

aroominyork

Many thanks tizerbelle - that's very clear and helpful.