I don't understand any of it..

http://www.thepensionsregulator.gov.uk/automatic-enrolment-earnings-threshold.aspx

Pensionable earnings: Earnings above a certain (lower - £112p/w 2015/6) figure and below a certain (higher - £815p/w 2015/6) figure.

Employers are only required to contribute based on amounts earned between those two figures. e.g. if you earn £220p/w, the amount the percentages will be based on will be £108 (£220 amount - £112 lower limit.)

Better employers will contribute based on the whole amount. (The whole £220 in the example above.)

http://www.thepensionsregulator.gov.uk/working-out-your-clients-costs.aspx

The minimum contributions for 2015/6 are 1% from employer, 1% from employee. Better employers may increase their percentage (possibly requiring a likewise increase from the employee.)

So, for the minimum requirements using the figures above:

Wage: £220
Pensionable earnings: £108
Employer contribution: 1% of £108 = £1.08 (coming from the company pot)
Employee contribution: 1% of £108 = £1.08 (coming from the employee's gross pay.)

So each week, your gross pay is effectively reduced by £1.08, your employer adds £1.08, and so £2.16 goes into your pension fund.

http://www.pensionsadvisoryservice.org.uk/about-pensions/pensions-basics/automatic-enrolment/how-much-do-i-and-my-employer-have-to-pay

Since your contribution effectively comes out of your gross pay, if your contribution actually comes out of your net pay (after you've paid 20% income tax) you only have to contribute the remaining 80% and the government will repay the 20% on that back:

Your actual contribution: £1.08 x 80% = £0.86(4) out of net pay
Government's tax relief: £1.08 x 20% = £0.21(6) refund
Total into pot: £1.08

I pay 3%
M&S pay 3%
The goverment pay 3%.

The first two I can understand (M&S will pay in more to your pot, if you do.)

I'm not sure about the 3% on that third line however....


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