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What are the pension contributions for auto enrolment in 2023/24?

You are free to choose a more generous pension but contributions can't be below a minimum percentage of Qualifying Earnings (QE). For the 2023/24 tax year, QE is a band of earnings starting at £520/m (or £120/wk) and ending at £4,189/m (or £967/wk).

If a worker is automatically enrolled

  • Employer contributions must be at least 3% of QE.
  • Employer plus employee contributions with tax relief must total at least 8% of QE.

Employers can meet these rules in different ways, such as paying the whole 8% 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 3% of QE.
  • Employee contribution 4% of QE.
  • Tax relief 1% 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 £620 for one month. £100 of this falls in the QE band, so the employer contributes £3, Jill £4 and HMRC £1.

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 (5% of QE) and lower tax, assuming the employee earns enough to pay tax.

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