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Set contributions

How much will the legal minimum be?

In 2012 the legal minimum will start at 2 per cent of a worker’s qualifying earnings. Of this, you need to pay at least 1 per cent. You can pay more if you want to.

By 2018* the minimum contribution level will rise gradually to 8 per cent. Of which you will need to pay at least 3 per cent.

What are qualifying earnings?

This is the band of gross annual earnings on which contributions are calculated.

This is currently between £5,035 and £33,540† a year in November 2008 terms. Qualifying earnings include a worker’s salary, wages, overtime, bonuses and commission, as well as statutory sick, maternity, paternity or adoption pay.

The gradual process through which minimum contributions are phased in is set out in the table below.

Date*	Minimum contributions as a percentage of a worker's qualifying earnings
October 2012 to September 2017	Minimum contribution: 2 per cent. Of this, you must pay at least: 1 per cent. For every £100 of qualifying earnings a worker earns, the minimum contribution is £2. Of this you must pay at least £1.
From October 2017 to September 2018	Minimum contribution: 5 per cent. Of this, you must pay at least: 2 per cent. For every £100 of qualifying earnings a worker earns, the minimum contribution is £5. Of this you must pay at least £2.
From October 2018 onwards	Minimum contribution: 8 per cent. Of this, you must pay at least: 3 per cent. For every £100 of qualifying earnings a worker earns, the minimum contribution is £8. Of this you must pay at least £3.

Date*

Minimum contributions

as a percentage of a worker's qualifying earnings

October 2012 to September 2017

Minimum contribution: 2 per cent.

Of this, you must pay at least: 1 per cent.

For every £100 of qualifying earnings a worker earns, the minimum contribution is £2. Of this you must pay at least £1.

From October 2017 to September 2018

Minimum contribution: 5 per cent.

Of this, you must pay at least: 2 per cent.

For every £100 of qualifying earnings a worker earns, the minimum contribution is £5. Of this you must pay at least £2.

From October 2018 onwards

Minimum contribution: 8 per cent.

Of this, you must pay at least: 3 per cent.

For every £100 of qualifying earnings a worker earns, the minimum contribution is £8. Of this you must pay at least £3.

Can you use NEST to pay in more than the minimum?

Yes. NEST makes it easy for you to pay the minimum contributions, but if you want to contribute more, you can.
For example, if you're using NEST alongside another scheme, you can tailor NEST contributions so they are in line with your existing pension provision, which must be at least equal to the legal minimum.

Paying more than the minimum could help you attract and retain workers.

NEST allows up to £4,400‡ in 2012/13 terms to be paid into a worker’s retirement pot in each tax year. This is called our contribution limit.

Footnote

* The Government proposed these new dates on 25 January 2012. The detail of these changes will be consulted on in due course.

† These figures were set out in the Pensions Act 2008 and will be reviewed annually by the Secretary of State.

‡ This is the annual contribution limit for the 2012/13 tax year. This figure will be adjusted annually in line with average earnings.