How are Auto Enrolment Pension contributions calculated?

Contributions are based on a percentage of your gross earnings (how much you earn before tax is taken off)

Why not use our Pension Contributions Calculator to find out what your contributions would be.

Here’s some information on the percentage contributions for workplace pensions set by the Government and how they increase from now until 2019.

In April 2018 contributions go up to 5% that’s 2% employer and 3% employee with 20% tax relief.

In April 2019 the contributions rise to 8% (and stay at 8% from there on) that’s 3% employer and 5% employee with 20% tax relief.

A bit about earnings thresholds

Minimum contributions have an upper and lower threshold of £46,350 and £6,032.

If someone earns £24k per year contributions are made on £17,968 (24,000-£6,032)

If someone earns £47k per year contributions are made on £40,318 (£46,350-£6,032)

Some examples to give you an idea

To give an idea of contributions, here is an example of someone on an annual salary of £24k:

From April 2018 – 5% (2% plus 3%)

The employer would contribute £29.94 per month and the employee would contribute £44.91 per month, the government will give 20% tax relief on the employees contribution so the amount they actually contribute is £35.93 (plus a £8.98 contribution from the Government from tax relief).

From April 2019 – 8% (3% plus 5%) (Based on 18/19 thresholds)

The employer would contribute £44.91 per month and the employee would contribute £74.85 per month, the government will give 20% tax relief on the employees contribution so the amount they actually contribute is £59.88 (plus a £14.97 contribution from the Government from tax relief).

Employer contributions

If someone earns less than £6,032 per year, they will not be automatically enrolled into a workplace pension. However, they may choose to opt in. In this scenario, as an employer, you do not have to make contributions on their behalf.

Roisin Gray

Posted on Monday 24 Oct, 2016, 3 years ago

April 18, 2018

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