Workplace pension - employee contributions

[lechatnoir]

I've just got my workplace pension statement and it shows employers contributions as expected but says I haven't paid anything - I thought employees were automatically enrolled or have I got this wrong and I should have set this up myself.

Do you pay your pension via salary sacrifice? If so, it would only show as employer contributions.

Check your payslip, it should show your contributions from your pay?

My workplace pension was incorrect, I contacted payroll and the pension company directly and it was eventually sorted out.

Check with payroll.

I'd be surprised if there were Employer Contributions without you paying in too. So the question is what are the mechanics of your contributions.

My payslip shows pension deductions of £121 but my pension statement says

You Paid: £0
Basic Rate Tax Relief: -
Employer Paid: £230.

So the £230 must be both my share and theirs as there's no way they are contribution nearly 10%!

You really need to contact payroll and ask them.

Your contract should specify how much the employer pays and what your minimum contribution is.

You need to get that corrected so it shows your contributions.

@Sisterpita that's what I'm thinking although not exactly sure what difference it makes!

The difference it makes is that you get tax relief on your contributions but not on your employer's contributions. If you are a 20% taxpayer your pension is 20% of your contribution worse off.

@GOODCAT thanks for clarifying so whilst not huge sums, definitely needs adjusting.

@Sisterpita it shows what you have contributed too.

So HR have replied but I'm still not convinced it's right:

Their first message was this:

This means you are ‘sacrificing’ or giving back 5% of your monthly salary which is added to the 5% matched by EMPLOYER. We then pay the combined 10% into your personal pension pot. This deduction means that you are taxed on a lower monthly salary, so not only do you pay less tax but you pay less NI as well.

and then when I queried if I would be benefitting from the 20% tax releif I got this:
Your pension benefits from the tax relief as long as you keep it in there. You can access it under certain conditions and withdraw 25% of the value tax free – whatever tax code you are on is irrelevant, you can draw 25% tax free. The remainder is taxable.

Sounds right to me.

That does not sound right, send them a copy of your payslip and ask “if I am paying 5% why does my payslip state my contribution is £0. Surely it should show £ .”

It’s probably as your employer is paying your contributions on your behalf.

The tax will be fine as the contributions are deducted from your salary, so your tax will be lower, as you won’t be paying tax on that part of your wages.

It's correc
My payslip shows day -£200 pension to come off my gross taxable salary
Employers also had to pay say £50

Pension received £250 from them. I have not made any pension contributions

But I have agreed to give up £200 salary which my employer pays as pension contributions rather than as salary.

You save ni too. It's good.

Your HR department is correct.

You are paying pension contributions via salary sacrifice. Your tax relief comes from the fact that the deduction is made from your gross pay. So if your salary is £1000 and you have £100 deducted from your pay for pension, your income tax and NI is calculated based on a salary of £900 and not £1000, and therefore you pay less tax and NI.

Salary sacrifice contributions, even though they are deducted from you, are shown as an employer contribution. There is a technical reason for this and in short, by entering a salary sacrifice agreement, you are agreeing for your employer to give you some benefits (ie higher level of pension contributions) in lieu of a salary payment to you (ie the pension deduction they are making for your pay), therefore the contribution is shown as an employer contribution.

That is correct OP. The explanation you have put up from HR is accurate.

HR are correct (I have worked in pensions for 20 years).

I dont think you are understanding how this type of pension works. They are sacrificing some of their salary which is paid directly to their pension. They then only tax and national insurance on the remaining salary so more tax efficient

Thanks I'm happy it's correct and grateful for explanations