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How much will we have to contribute to the pension scheme?

Nicolas Croix avatar
Written by Nicolas Croix
Updated over 3 years ago

There is a minimum total amount that has to be contributed by you, your employer and the government (in the form of tax relief).

These minimums are generally: 5% from the employee (which includes tax relief) and 3% from the employer.

The minimum contribution applies to anything you earn over £6,240 up to a limit of £50,270 (in the tax year 2021/22). This slice of the employee's earnings is known as qualifying earnings.

So, if the employee earns £18,000 a year, their minimum contribution would be a percentage of £11,760 (the difference between £6,240 and £18,000).

Some employers apply the pension contribution to the whole of the employee's earnings, not just to qualifying earnings.

This depends on how they have set up the scheme. Double-check with your pension provider if you’re not sure whether you pay pension contributions on qualifying earnings.

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