Maximum contributions on pension

ManCity11

Hi all

So does any1 know how much i can contribute to my workplace pension. I cant find the answer online it just says cant go below minimum wage a  really dont understand it.

So i Earn 32k and really want to put as much as possible as i am playing catch up
as  i have never had a pension before.

hope someone can help
thank you

molerat

You can pay up to your total salary gross into a pension.  You are not allowed to salary sacrifice below minimum wage.  What contribution method does your employer use - salary sacrifice, net pay or relief at source - does your payslip show a lower taxable pay than your gross pay or does the pension provider add 25% of your contributions ?

Cobbler_tone

ManCity11 said:

Hi all

So does any1 know how much i can contribute to my workplace pension. I cant find the answer online it just says cant go below minimum wage a  really dont understand it.

So i Earn 32k and really want to put as much as possible as i am playing catch up
as  i have never had a pension before.

hope someone can help
thank you

If SS ask your HR department because they are not allowed to take you below NMW. Depends on other taxable benefits if added/taken away. If anything like mine they will tell you the percentage. i.e. I buy holiday, buy shares, get healthcare as a taxable benefit, with my contractual salary as a starting number.

Your arrangement is important (“relief at source” or “net pay arrangement”) to tell you whether your current deductions comply with NMW rules. 

If you are automatically enrolled it is your employer’s responsibility not to pay you below the threshold.

ManCity11

Thanks for the replies.

so i am  pretty  clueless with this stuff. All a know is i pay 5% and work pay 10%.

Work wont pay more than 10% thats the max.

 Its on a  salary sacrifice scheme. I want to up my contribution to 40% ideally.

Does anyone know what salary is NMW.

So i gave my basic salary of 32k
But i do get 13k shift pay.
But i didnt included as i know my contributions
are based on my basic pay.

Cobbler_tone

NMW is £12.21 PH if you are over 21. You can work yours out against your contract. You may be able to contribute 40% via your wages as your wages will be counted as £45k.
Look at your P60 for last year or your gross run rate for this.

Linton

ManCity11 said:

Thanks for the replies.

so i am  pretty  clueless with this stuff. All a know is i pay 5% and work pay 10%.

Work wont pay more than 10% thats the max.

 Its on a  salary sacrifice scheme. I want to up my contribution to 40% ideally.

Does anyone know what salary is NMW.

So i gave my basic salary of 32k
But i do get 13k shift pay.
But i didnt included as i know my contributions
are based on my basic pay.

Shift pay may or may not count as income for working out your allowed SS pension contributions. See https://www.gov.uk/guidance/calculating-the-minimum-wage/calculating-the-minimum-wage.

NMW is £12.21/hour which works out at about £25K/year, obviously depending on how many hours you work..  The test for whether you are below NMW is carried out each time you are paid.  

Marcon

ManCity11 said:

Thanks for the replies.

so i am  pretty  clueless with this stuff. All a know is i pay 5% and work pay 10%.

Work wont pay more than 10% thats the max.

 Its on a  salary sacrifice scheme. I want to up my contribution to 40% ideally.

Does anyone know what salary is NMW.

So i gave my basic salary of 32k
But i do get 13k shift pay.
But i didnt included as i know my contributions
are based on my basic pay.

So you earn £45K a year (assuming your basic pay of £32K is the pre-SS number - is it?), and want to contribute 40%. That's £18K a year.

Make your own life simple and ask HR to confirm the maximum you can SS, which could take into account your shift pay BUT employers will sometimes only allow people to SS against basic pay. You need to check.

Once you have confirmation of the SS maximum, you need to make personal contributions to 'top up' to the £18K you want to contribute in total. If you are in a 'relief at source' scheme, you'd pay in 80% of that figure and the provider claims and adds basic rate tax relief (in respect of personal contributions - employer contributions are paid gross, and SS are technically employer contributions) to your 'pot'.

All the above looks and sounds horribly complicated, but with a bit of help from your employer you should be able to get there without too much difficulty. And of course you could always come back here if still confused by the arcane world of pensions...

Cobbler_tone

Got point on the shift premium. I always used to get 33% but was baked in to salary. e.g. a day worker might get £25k and a 24/7 worker doing the same job was on £33,250. If it is a separate payment it may not be eligible, the same with overtime.
Linton’s link is good info.

ManCity11

Thank you so much for your help
 

I work 40 hours I work so it would be 40 x 12.21
I cant go below this. How can minimum wage workers pay into a pension if thats the case like.

My thinking is why i want to up it so much is
we get universal credit so if net pay is lower
UC will go up 55%.

Marcon

ManCity11 said:

Thank you so much for your help
 

I work 40 hours I work so it would be 40 x 12.21
I cant go below this. How can minimum wage workers pay into a pension if thats the case like.

Minimum wage applies to the gross salary paid by the employer. Salary sacrifice would reduce that, so minimum wage workers can't use salary sacrifice. They have to make personal contributions. 

Marcon

ManCity11 said:

My thinking is why i want to up it so much is
we get universal credit so if net pay is lower
UC will go up 55%.

You clearly have your head wrapped round this, but other readers of the thread in a similar position might find this useful: https://www.litrg.org.uk/pensions/paying-pensions/pension-contributions-effect-state-benefits