Employer and government payments to workplace pensions

When you pay into a workplace pension, your employer and the government also contribute. The amount paid depends on your employer’s pension scheme and your earnings, but minimum contribution rates are set. Find out how much this could be and how to get an estimate of your pension fund.

How much goes into your workplace pension

Unlike other ways of saving, a workplace pension means you aren’t the only one putting money in. Your employer has to contribute too, as long as you earn over £6,136 a year.

You will also get a contribution from the government in the form of tax relief. This means some of your money that would have gone to the government as income tax, goes into your workplace pension instead.

If you pay Income Tax, the government adds money to your workplace pension as tax relief. If you don't pay Income Tax, you'll get tax relief if your pension scheme uses relief at source to add tax relief to your pension.

Your employer will take your contribution directly from your pay. This applies however regularly you get paid: daily, weekly, monthly, or four weekly.

You haven't been automatically enrolled into a workplace pension

Your employer decides the minimum and maximum amounts you and they pay into your pension. If you pay Income Tax, the government automatically adds tax relief to your contribution.

You have been automatically enrolled into a workplace pension

You and your employer must pay a percentage of your earnings into your workplace pension scheme. 

Under automatic enrollment schemes, you’ll make contributions based on your total earnings between £6,136 and £50,000 a year before tax. Your total earnings include:

  • salary or wages
  • bonuses and commission
  • overtime
  • statutory sick pay
  • statutory maternity, paternity or adoption pay

Qualifying earnings 

From April 2019 the amount of total minimum contributions increases to eight per cent - your employer will contribute three per cent and you will contribute five per cent.

These amounts could be higher for you or your employer because of your pension scheme rules. They’re higher for most defined benefit pension schemes.

In some schemes, your employer has the option to pay in more than the legal minimum. In these schemes, you can pay in less as long as your employer puts in enough to meet the total minimum contribution.

Effect on tax credits, income-related benefits or student loan repayments

When you join a workplace pension scheme, your take home income is reduced. With a reduced income you might be:

  • entitled to tax credits or increased tax credits (but this might not change your tax credits until the next tax year)
  • entitled to an income-related benefit or an increased benefit amount
  • responsible for repaying lower student loan amounts


The contributions to John’s workplace pension are worked out as an amount of his gross basic salary. ‘Gross’ means before tax comes off, ‘basic’ means not including overtime or bonuses.

John earns £12,000 a year (£1,000 a month). This is his gross basic salary. He is paid monthly.

His employer’s pension scheme uses the following percentages to calculate the contributions:

  • John’s contribution - he pays in four per cent of his gross basic salary
  • employer’s contribution – an amount equal to three per cent of John’s gross basic salary
  • government’s contribution - in the form of tax relief, is equal to one per cent of John’s gross basic salary

This means

  • John pays in £40 a month - this is taken directly from his monthly pay
  • his employer pays in £30 a month
  • the government, in the form of tax relief on his payment, pays in £10 a month

Although John puts in £40 a month, the total contribution to his pension is £80 a month.

The government has set minimum levels for what has to be paid in by your employer and what is contributed in total.

In this example, John's employer is contributing more than the minimum required by the government. This means that someone earning £12,000 a year may receive less from their employer than John receives.

More information on these minimum levels can be found in ‘What to expect from your employer and your workplace pension’.

The Money Advice Service has an online calculator to help you find out how much you, your employer and the government could pay into your workplace pension. Enter your salary, and the calculator will show you what this means in terms of pension contributions in pounds and pence.

How much you’ll get when you retire

It’s possible to get an estimate of how much you will get from a workplace pension. This is sometimes known as a ‘pension projection’. You can get this from the your pension scheme provider.

They may also have an online calculator that can help you work out the income you’ll get when you retire.

Amounts paid into my pension

The amounts paid into your pension could increase or decrease if your basic salary goes up or down.

Most schemes allow you to increase the amount you put in, if you want, up to a maximum amount. The amount contributed by the government in the form of tax relief may also change. Whoever runs your pension scheme will be able to give you more information.

Enough for the future

Being in a workplace pension means you’ve taken an important step towards giving yourself the lifestyle you would like later in life. You’ll need money for paying bills, transport and food, but you may also want money to:

  • run a car
  • socialise with friends
  • buy gifts for your family or friends
  • go on holidays
  • do sport or other leisure activities

Once you have an estimate of how much income you can expect from your workplace pension, you can assess if the amount will be enough.

If you’re concerned you won’t have enough, you could contribute more to your pension, work longer, and save in other ways. Find out more about how you can increase your income in retirement:


If you earn more than £6,136 a year and you are in a workplace pension scheme, your employer has to contribute to it. If you earn £6,136 or less a year, your employer does not have to contribute, but can choose to do so.

The earnings figure £6,136 is valid during the 2019-2020 tax year and applies if  you get paid daily, weekly, monthly or every four weeks.

What to expect from your employer

Find out what your employer must do, what they can choose to do and what they must not do.

More useful links

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