Employer contributions

Employer pension contributions are simply payments your employer makes into your workplace pension scheme on behalf of you and the other members. Effectively, it’s free money, and that’s worth having!

How much will my employer pay into my pension?

By law your employer must auto enrol you into their workplace pension scheme and pay into it. For a typical defined contribution pension, in which you build up your own savings pot, the rules require your employer to pay contributions based upon a percentage of your earnings. The minimum they have to pay is 3% of your earnings, but it could be more, subject to limits.

In a defined benefit pension, there’s a single scheme covering all members. Your employer pays in to build up the guaranteed pension that you receive at retirement. The amounts they pay on your behalf vary depending on your age and salary, as well as other factors such as how long people live. The contributions are almost always higher than other types of pension, which is why the retirement benefits are so good.

Whatever your employer contributes to your pension, you’ll typically be required to pay in as well. Don’t forget, the government chips in tax relief on top to boost what goes in!

Can my employer pay my contributions for me?

Yes, they can in two ways. Some employers don’t ask you to contribute as they pay all the pension contributions. The other way is called salary sacrifice. Sounds grizzly, but it actually isn’t! Effectively, you agree to give up enough salary to cover your pension contribution, and your employer adds this to their payment which is then paid to your pension as a single amount.

Salary sacrifice is a ‘win, win’ situation. You get tax relief as normal, and don’t pay National Insurance contributions (NI) on the salary you give up. Typically, your savings can be used to boost either your take home pay, or your pension payment. Your employer also saves because they can offset the pension payments against their business costs, and they also don’t pay NI on the income you give up.

Does my employer benefit from paying into my pension?

Employers can treat the payments as an allowable business expense for corporation tax. They’re also not liable for employer’s national insurance payments on pension contributions they pay for you, which is different than if they were paying your salary. So, it’s tax efficient for them too.

Share this

Thinking about your pension options?

We can help you to make the best possible decisions when it comes to your pension.

The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article.
0800 009 3388
Mon-Fri 9am-5pm


Pension Access is a trading name of Harbour Rock Capital Limited which is registered in England & Wales as a Limited Company, No. 10290349. Authorised and regulated by the Financial Conduct Authority, No. 754580. Registered Offices: Affinity House, Beaufort Court, Sir Thomas Longley Road, Rochester, Kent, ME2 4FD. Telephone: 0800 009 3388. Email: pensionaccess@harbourrockcapital.co.uk
© 2024 Pension Access. All right reserved.
What's in your info pack?
Your FREE information pack contains all the information you need to make an informed decision on wheter or not taking tax free cash from your pension is right for you.
Get your Free Info Pack
Complete the form and we'll send you an information pack in the post
Note: We are unable to advise on the state pension or any pension you are already taking an income from.

    Get your free info pack

    Where should we send your info pack?

    Please complete your details below and we'll send your information pack in the next available post

    Find Your address

    Type in your postcode or start typing your address then select from the drop-down list

    Your address

    We'll post your information pack here

    Keeping in touch

    We'll send you updates by email or text message. One of our specialists may call, just in case you have any questions about your pension. We’re big believers in never bombarding people with calls.

    Safety PadlockYour information is safe with us. Our calls are recorded for regulatory, legal and training requirements. Please see our privacy notice for information on our data practices here


    Hands using calculator to calculate home equity amount