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Company Pension Contributions Being Paid on Gross Salary Minus £6240

WSB
Posts: 160 Forumite

Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
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Comments
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WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks2 -
FIREDreamer said:WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
Can you give some explanation though.0 -
WSB said:FIREDreamer said:WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
Can you give some explanation though.Employers have to pay in a minimum of 3% of salary between £6,240 and £50,270.It’s not great for low or higher earners.
Actually it’s not great for anyone as 3% is peanuts.3 -
wolvoman said:WSB said:FIREDreamer said:WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
Can you give some explanation though.Employers have to pay in a minimum of 3% of salary between £6,240 and £50,270.It’s not great for low or higher earners.
Actually it’s not great for anyone as 3% is peanuts.
Yes, she certainly has a crap deal.
With this type of pension, would she be able to increase her pension contributions from the nominal 5%?0 -
It is called qualifying earnings and they only need to pay their contribution for those earning in excess of £10K on earnings between £6240 and £50270, that is the legislation. You may also find that her deduction is only 4% of her qualifying earnings, the 25% tax uplift added by the pension provider takes that up to 5%.
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molerat said:It is called qualifying earnings and they only need to pay their contribution for those earning in excess of £10K on earnings between £6240 and £50270, that is the legislation. You may also find that her deduction is only 4% of her qualifying earnings, the 25% tax uplift added by the pension provider takes that up to 5%.
We would like to increase her contributions, if that's possible?0 -
WSB said:FIREDreamer said:WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks
Can you give some explanation though.1 -
ali_bear said:WSB said:We would like to increase her contributions, if that's possible?
What other options are there?
My understanding is that salary sacrifice just means they deduct the pension contributions before applying the tax.
Is that not the same for all pension contributions?0 -
WSB said:FIREDreamer said:WSB said:Discovered recently that my wife's employer who contributes 3% into her pension scheme is not paying this 3% on her yearly gross salary but on 3% of her gross salary minus £6240.
Apparently, the employer is allowed to do this due to some rules.
We always thought company pension contributions were based on a % of gross yearly salary, so are a bit surprised by this.
Could someone please shed some light on this please?
Many Thanks1
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