UK - pension

UK - pension

UK pension rules - overview

NEST’s policy - Employee pays 5% & Employer (XML) contributes additional 3%

The calculation is based on the Banded Qualifying Earnings which means that the first £650 of income in the payroll month is not included in the calculation, and once they go over £3,669 the contributions are capped at that amount.

So, for example if you earn £2,000 per month, the pensionable pay is £1,350 i.e., £2,000-£650=£1,350.5% of $1,350 = £67.50 will be the deduction from payslip.

If for example you earn £4,500, the contribution will be £4,500-£650 = £3,850. Because this is greater than the £3,669 qualifying banded earnings limit, the deduction will be 5% x £3,669 = £183.45.

NEST also claim 20% basic rate tax relief at source via Payroll.  For Employees on Higher Rate Tax – the higher rate differential should be claimed via Tax Return.


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