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Workers and employers can both contribute into NEST to build a retirement pot for the worker. The new duties mean you’ll need to make at least a minimum level of contributions on behalf of some or all of your workers.

An illustration showing when employers will need to make minimum contributions for their employers.

Any worker who earns over the lower threshold for qualifying earnings is called a ‘jobholder’. You’ll have to make a minimum contribution into their retirement pot every time they’re paid.

Workers earning less than the lower threshold of qualifying earnings are called ‘entitled workers’ or ‘workers without qualifying earnings’. For these workers, you don't have to make a minimum contribution, but you can if you want to.

What are qualifying earnings?

An illustration showing the earnings that make up qualifying earnings. A worker’s salary, wages, overtime, bonuses and commission, as well as statutory sick, maternity, paternity or adoption pay.

Qualifying earnings is a band of gross annual earnings that can be used to work out what contributions a worker should get. It includes a worker’s salary, wages, overtime, bonuses and commission, as well as statutory sick, maternity, paternity or adoption pay.

For the 2016/17 tax year it’s anything over £5,824 and up to £43,000. The figures are reviewed every year by the government and usually change.

How much is the minimum contribution?

The legal minimum for jobholders is currently 2 per cent of their qualifying earnings. Of this, you need to pay at least 1 per cent. The remainder comes from your workers’ pay – which you'll have to collect and send to NEST - and tax relief from the government. NEST will claim the tax relief on your workers’ behalf.

You can pay more if you want to. Some employers pay all of their workers’ minimum contribution or pay additional amounts on top of the minimum. This is a good way of attracting and keeping good workers in your organisation.

Minimum contributions are increasing gradually over the next few years. By April 2019, subject to parliamentary approval, the combined minimum contribution rate for qualifying earnings will have gone up to 8 per cent of which you must pay 3 per cent.

Find out more about minimum contributions

Limit on contributions

Currently NEST has a cap on the total amount that can go into a worker’s retirement pot in a tax year. This is called the annual contribution limit. It means that no more than £4,900 for 2016/17 can be paid into a worker’s NEST retirement pot. This includes worker contributions, your contributions and any tax relief.

If you and your workers both pay the minimum contribution based on their qualifying earnings, you won’t be affected by this limit.

In April 2017 the limit will be removed completely. So when the time comes for minimum contributions to go up, there’ll be no restrictions on how much can go into a worker’s NEST pot.

Find out more about the annual contribution limit in our help centre

Working out minimum contributions

The minimum contribution is a percentage of a worker’s gross annual earnings that fall within the qualifying earnings band.

For the 2016/17 tax year this means that the first £5,824 of their earnings isn’t included in the calculation. For example, if a worker earned £20,000 in 2016/17 their qualifying earnings would be £14,176 and their annual minimum contribution would be based on that.

Because you pay contributions every time you pay your workers, you’ll need to work out qualifying earnings for each pay period and make your contribution based on these amounts. There may be pay periods when workers don’t earn enough to qualify for a minimum contribution.

The table below shows the lower and upper levels of qualifying earnings for some commonly-used pay periods. You’ll need to make a contribution based on everything they’re paid over the lower level and up to the upper level.

Pay period

Lower level

of qualifying earnings

Upper level

of qualifying earnings









Monthly £486



Different ways to work out minimum contributions

You don’t have to use qualifying earnings to work out contributions for jobholders. For example, you can use your existing definition of pensionable earnings if you already have a scheme in place, or you might find it easier to use total pay.

This is often referred to as ‘certification’ because you have to complete a document called a certificate if you’re using an earnings basis other than qualifying earnings. Minimum contributions are still being phased in, but the minimum contribution rates may be different depending on which basis you choose.

Deciding which earnings basis is right for you and your workers will depend on your current pensions and reward strategies and the different cost of each option. The Pensions Regulator (opens in a new window) can help you understand which one is best for your organisation.

Remember, if you use an earnings basis other than qualifying earnings, you might push the total going into a worker’s pot above NEST’s annual contribution limit (ACL).

See more about the ACL in our help centre

Using NEST to manage contributions

NEST allows you to use a definition of earnings that suits your organisation. It lets you work out contributions based on either qualifying earnings or one of the alternative earnings bases.

Our preset contribution levels make it easier to calculate minimum contributions. Or you can work out your own basis for pensionable earnings and use that if you want to. You can also choose to set contributions at a higher rate than the minimum.

Find out more about calculating contributions in our help centre

Ongoing management

Once you’ve worked out how much your contributions are going to be and enrolled your workers, you’ll have to be ready to make contributions every time you pay your workers. You'll also need to manage enrolments and opt outs.

Find out more about managing NEST

Getting help

NEST makes it easy to get help. You can hand over some or all of the tasks involved with setting up and managing NEST to someone else. This could be someone in your organisation or a third-party provider using NEST Connect.

Find out about delegated access