When you work out how much to pay into your pension scheme you need to know what staff earnings to use in your calculation. This will depend on the type of scheme you choose.
If you pay the minimum of 8%, you will need to base your calculation on a specific range of earnings. For the 2022/23 tax year this range is between £6,240 and £50,270 a year (£520 and £4,189 a month, or £120 and £967 a week). These figures are reviewed each year by the government.
You will also need to include the following types of staff pay in your calculation:
- salary
- wages
- commission
- bonuses
- overtime
- statutory sick pay
- statutory maternity pay
- ordinary or additional statutory paternity pay
- statutory adoption pay
You can also use our online contributions calculatorto help work out your costs for each member of staff.
Payroll software
Payroll software that is set up for automatic enrolment may be able to calculate contributions for you and make the correct deductions from staff pay. To find out what you can do if you don't have payroll software or if your existing software is not set up for automatic enrolment, for example if you use HMRC Basic PAYE Tools (BPT), go to check your payroll process.
When you must pay your contributions
You must agree the dates when you will pay contributions into the scheme with your scheme provider.
However, by law, when you take contributions from your staff's pay you must pay these to your pension scheme by the 22nd (19th if you pay by cheque) day of the next month.
You may be fined by The Pensions Regulator if you don't pay by the time you've agreed with your scheme provider.
First payments for automatic enrolment
There are special rules for the first payment of contributions for each member of staff. To help you manage refunds for staff who ask to leave your scheme, some schemes may allow you to pay the first three months of contributions in one go on the 22nd of the fourth month. Speak to your scheme provider for more information.
Providing information to your pension scheme provider
As part of your normal business processes you should provide the following information to your pension scheme provider:
- any changes to a member's earnings or contribution rate into the pension scheme
- any requests to join or leave the pension scheme
Your scheme provider needs this information so that they can check that the right contributions are being made into the scheme and to report any missing amounts to The Pensions Regulator.
You should agree how and when you will provide this information when you set up your scheme. For instance, you may decide to send details of staff earnings at the same time as you pay contributions to the scheme.
The scheme provider may ask you for additional information, in order to monitor the correct payment of contributions. This must be provided within a reasonable period of the request or as agreed with the pension scheme. Failure to maintain payment of the correct contributions to a scheme may result in penalties from the Regulator.
