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Workplace Pension Contributions
MoneyWorry
Posts: 231 Forumite
Hi all
I just wanted to check how my workplace contributions and deductions are being treated. Should have done this before..... me bad.
I earn £1751 per month, a basic rate tax payer and am auto enrolled into a stakeholder workplace pension with I believe relief at source.
I couldn't get my head round this at first, but here goes:
My employer contributes 3% a month.
My contribution is 3.75% a month so 80% is then set across the whole of my salary, not qualifying earnings. So from my last payslip, I have PAYE £152.60, NI £126.12 and pension £52.53.
In April, my employer is not raising their contribution beyond 3% quite legally, but I'm assuming my contribution will go up to 6.25% which will then be down to the 80% for deduction purposes. My query is that this does not seem the way most employers have dealt with workplace pensions. It also seems that they have a "get out of jail" card to not raise their contributions in April.
What does everyone think?
I just wanted to check how my workplace contributions and deductions are being treated. Should have done this before..... me bad.
I earn £1751 per month, a basic rate tax payer and am auto enrolled into a stakeholder workplace pension with I believe relief at source.
I couldn't get my head round this at first, but here goes:
My employer contributes 3% a month.
My contribution is 3.75% a month so 80% is then set across the whole of my salary, not qualifying earnings. So from my last payslip, I have PAYE £152.60, NI £126.12 and pension £52.53.
In April, my employer is not raising their contribution beyond 3% quite legally, but I'm assuming my contribution will go up to 6.25% which will then be down to the 80% for deduction purposes. My query is that this does not seem the way most employers have dealt with workplace pensions. It also seems that they have a "get out of jail" card to not raise their contributions in April.
What does everyone think?
0
Comments
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This (2018/19) tax year minimums:
2% employer, 3% employee (2.4% if getting grossed up later).
Next (2019/20) tax year minimums:
3% employer, 5% employee (4% if grossing up later)
The absolute minimum you're required to contribute is 5% before tax (4% after,) so the least it needs to go up is either .25% or 1.25% depending on whether that 3.75% is a before- or after-tax percentage.It also seems that they have a "get out of jail" card to not raise their contributions in April.
That 'get out of jail card' is because they were previously paying above the minimum required of them.
The 2019/20 minimum happens to be what they were paying before (and, thus, now) so they're not required to raise it at all.Conjugating the verb 'to be":
-o I am humble -o You are attention seeking -o She is Nadine Dorries0 -
Thanks Paul
I have requested from our salaries department how much will be deducted from April. They didn’t have the answer immediately so we shall see. To be honest, I am wavering about whether to opt-out or not, but hopefully with all the information can make the right decision.0 -
MoneyWorry wrote: »Thanks Paul
I have requested from our salaries department how much will be deducted from April. They didn’t have the answer immediately so we shall see. To be honest, I am wavering about whether to opt-out or not, but hopefully with all the information can make the right decision.
Why on earth would you opt-out? You would lose the employer's 3% contribution to your pension plan. It's like volunteering for a pay cut.I am an Independent Financial Adviser. Any comments I make here are intended for information / discussion only. Nothing I post here should be construed as advice. If you are looking for individual financial advice, please contact a local Independent Financial Adviser.0 -
To be honest, I am wavering about whether to opt-out or not, but hopefully with all the information can make the right decision.
Do you like throwing money away?
No alternative will come close to matching the workplace scheme. It is crazy to opt out.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0
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