Assessing the employee contribution rate

Employee Contributions

Table of Contents

Assessing the employee contribution rate

The appropriate contribution rate is to be determined by the employer estimating the annual equivalent of the actual (not full time equivalent) pay to be received in a full scheme year (1 April to 31 March) rounded down to the nearest whole pound. This can be done in a number of ways for example:

  • The annual rate of contractual pay;
  • The annual rate of contractual pay plus an estimation of non-contractual overtime or hours worked in excess of the contractual which might be worked in a full year;
  • The hourly contractual rate multiplied by an estimate of the number of hours to be worked in a full year;
  • The weekly contractual rate multiplied by 52.143;
  • The weekly contractual rate multiplied by 52.143 plus an estimate of other pensionable payments to be made in a full year

It is the responsibility of the Scheme employer to assess the appropriate rate for each of their employees and for each post that their employees may hold in a reasonable and consistent manner. The employer must also notify their scheme members of any revision to their employee contribution rate. To assist employers we have provided a template letter which can be used for this purpose:

Example: 1

A full-time member's actual annual pensionable pay is £24,000.

Their contribution rate in this instance would be 5.80% (based on the contribution bandings table for 2023/2024).

Example 2

A part-time member's actual annual pensionable pay is £12,500.

Their contribution rate in this instance would be 5.50% (based on the contribution bandings table for 2023/2024).