Employer Workplace Pension Contributions
How Much Should My Employer Pay

How Much Should My Employer Pay As Workplace Pension Contributions?

Pensions are a crucial aspect of financial planning, especially as we look toward our future retirements. As a UK employee, understanding how much your employer ought to contribute to a workplace pension is essential for securing a comfortable retirement. In this blog post, we’ll delve into the intricacies of employer pension contributions, exploring the current landscape in the UK and providing insights into what you can expect from your employer.

Company Pension Contributions

Pension contributions are a fundamental component of the UK’s Workplace Pension scheme. The government introduced auto-enrolment employee pensions in 2012. This made it mandatory for employers to automatically enrol eligible workers into a corporate pension scheme and reduce the burden on the state pension system.

All employees share contributions to their pension funds with their employers. The minimum contribution levels are set by the government and are subject to periodic review. As of the latest information available, the total minimum pension contribution is 8% of your qualifying earnings. At least 3% of your qualifying earnings needs to come from your employer. This will leave 4% to you and 1% to government tax relief. Using a very basic workplace pension calculator, for example, we can see that £40,000 in annual qualifying earnings would mean a minimum workplace contribution of £3,200. The employer contribution to your pension scheme would be £1,200. This would leave you with 4%, £1,600 and £400 of government tax relief.

Qualifying Earnings & Workplace Pension Rules

Qualifying Earnings are a bracketed section of your salary and other income calculated before Income Tax and National Insurance contributions are deducted. They include everything you earn including your wages, commissions, bonuses and overtime. For the 2023-24 tax year, this is everything over £6,240 and up to £50,270.

Some employers, however, refer to ‘Pensionable Pay’ when calculating their contributions. Pensionable pay is often used for pension schemes that predate mandatory Workplace Pension schemes. In these cases, pensionable pay is defined by the rules of the individual scheme rather than the government mandate. It may affect how extra earnings, such as overtime and bonuses, are treated. In the case of a pensionable pay scheme, your employer will confirm the level of contributions they will make and the level that is needed from you before you are enrolled.

Paying More Than The Minimum Pension Contribution

While the government mandates a minimum contribution level, many employers opt to contribute more to attract and retain talent. ​​There’s no maximum pension contribution for employers. The decision to pay more often depends on various factors including the company’s financial health, industry norms and the overall benefits package offered to employees. Any package might include contributions above the Qualifying Earnings cap (£50,270 a year in the 2023-24 tax year), although there’s no obligation for employers to take this step.

Competitive employers use employer contributions to stand out in the job market. Additionally, businesses with a strong commitment to employee well-being may view a generous pension contribution as part of their broader responsibility to support their workforce.

You, as an employee, can also choose to pay more than the minimum contribution. In most cases, you can ask your employer to do this with the minimum of fuss.

Negotiating Workplace Pension Schemes

In some cases, you may have the opportunity to negotiate pension contributions as part of your employment contract and overall compensation package. Even if this isn’t offered proactively, it’s worth raising with your employer, especially if you bring valuable skills and experience to the table.

Before entering negotiations, research industry standards and gather information about pension contributions offered by comparable companies. Data can strengthen your case and provide a realistic benchmark for your employer.

Salary Sacrifice, Net Pay & Relief At Source Schemes

When it comes to tax on your pension contributions, there are three types of arrangements; Salary Sacrifice, Net Pay and Relief at Source. Members of a salary sacrifice pension scheme swap a reduction in salary for an equal pension contribution from their employer. You are not taxed on this contribution.

With Net Pay, your employer takes your contribution from your pay before it’s taxed and you only pay tax on what’s left. This means you get full tax relief, no matter if you pay tax at the basic, higher or additional tax rate. The amount going into your pension on your payslip is your contribution plus any tax relief.

Within a Relief at Source pension scheme, your employer takes your pension contribution after taking tax and National Insurance from your pay. However much you earn, it is your pension provider that adds the tax relief to your pension pot rather than the government – and they do this at the basic tax rate. The amount you see on your payslip is only your contributions, not the tax relief. This means that, if you have a relief at source pension scheme, you may be able to claim money back if you pay the higher or additional rate of Income Tax. The good news is that the Tax Owed To You team might be able to help you earn some of that tax back. Start by filling out the form on our website.

Administering A Workplace Pension

Employers must automatically enrol eligible workers into a qualifying pension scheme and make the necessary contributions. This should happen without you having to request it or undertake any paperwork. If you’re not automatically enrolled for any reason, you have the right to request enrollment and your employer cannot legally refuse.

It is, however, always worth regularly checking your payslips to confirm that the correct pension contributions are being deducted. If you have concerns or notice discrepancies, discuss them with your employer or the pension provider promptly. Understanding your rights and staying vigilant ensures that you receive the pension benefits you are entitled to.


As an employee, it’s easy to feel like a workplace pension is entirely your employer’s responsibility. However, it is essential to be proactive in managing your pension, regularly reviewing your contributions and benefits package. Many employers go above and beyond their minimum obligations to support their employees’ retirement aspirations. It pays to negotiate if you believe you deserve more.

Remember that pension planning is a long-term commitment, and early action can significantly impact your future financial well-being. By staying informed, carefully managing your pension and actively engaging with your employer, you can build a solid foundation for a comfortable and secure retirement.

And, if you think we can help you reclaim your tax, simply fill out the form and our website and we’ll do the hard work for you.