What are the pension contributions for auto enrolment in 2018/19?

You are free to choose a more generous pension but contributions can't be below a minimum percentage of Qualifying Earnings (QE). For the 2018/19 tax year, QE is a band of earnings starting at £503/m (or £116/wk) and ending at £3,863/m (or £892/wk).

If a worker is automatically enrolled

• Employer contributions must be at least 2% of QE.
• Employer plus employee contributions with tax relief must total at least 5% of QE.

Employers can meet these rules in different ways, such as paying the whole 5% themselves. If an employer chooses to pay the minimum and the pension scheme uses Relief at Source (the tax relief used by NEST) then the minimum contributions are

• Employer contribution 2% of QE.
• Employee contribution 2.4% of QE.
• Tax relief 0.6% of QE, claimed from HMRC by the pension company.

To use the above figures, choose the option 'Minimum Pension for Auto Enrolment (RAS)'.

Examples

1. Jack earns £110 for one week. His earnings don't reach the QE band, so no pension contributions are made.
2. Jill earns £603 for one month. £100 of this falls in the QE band, so the employer contributes £2, Jill £2.40 and HMRC 60p.

The minimum case works differently if the pension uses the Net Pay Arrangement for tax relief. In this case, the deductions from pay include a higher pension contribution (3% of QE) and lower tax, assuming the employee earns enough to pay tax.