What are your employer pension costs? Calculate contributions under auto-enrolment, compare qualifying vs total earnings schemes, and see salary sacrifice NI savings.
Show NI savings from salary exchange arrangement
Lower limit: £6,240/year
Upper limit: £50,270/year
Auto-enrolment trigger: £10,000/year
Qualifying earnings contributions are calculated on earnings within this band only.
Employer + Employee
£1,900.80
per year
Employer Contribution
£712.80
3% rate
Employee Contribution
£1,188.00
5% rate
Qualifying Earnings
£23,760.00
Within band
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See how the widget worksWorkplace pensions became mandatory for UK employers under auto-enrolment rules. Understanding how contributions are calculated helps both employers budget correctly and employees plan for retirement.
All UK employers must automatically enrol eligible workers into a pension scheme. Workers are eligible if they:
The law sets minimum contribution levels that must be met:
| Contributor | Minimum Rate |
|---|---|
| Employer | 3% |
| Employee | 5% |
| Total | 8% |
There are different ways to calculate the earnings on which pension contributions are based:
Contributions are calculated on earnings between the lower limit (£6,240) and upper limit (£50,270). This is the most common approach and results in lower overall contributions.
Contributions are calculated on the full salary from the first pound. This results in higher contributions but better retirement outcomes.
Salary exchange (sometimes called salary sacrifice) is an arrangement where employees agree to reduce their salary in exchange for larger employer pension contributions. The benefits include:
Many employers pass on some of their NI savings to employees in the form of increased pension contributions, making this a win-win arrangement.
Employers must:
Pension contributions add to your overall employment costs alongside employer National Insurance. Use our employee cost calculator to see the combined impact of NI, pension, and other costs on your hiring budget.
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