by Admin

As I wrote a short while ago, for a long time people have been emailing and requesting that The Salary Calculator offer support for pension contributions. My excuse had always been that pension contributions aren’t as simple as they might seem, but now I have finally tackled the problem.

Deductions made at source for a company pension or other pension scheme are typically a percentage of your salary, and any contributions you make to the pension are not taxed. The complication comes when employers calculate what is called “pensionable pay” – it is a percentage of this that is deducted each paycheck. As you can see in this related article about pensions, this is not necessarily just your annual salary – each employer calculates it differently.

Therefore, the pension deductions which have been added to The Salary Calculator are an estimate. They may match exactly what your employer does, but probably they will not. However, this is an improvement to the calculator in that it can give you a better indication of what your take home pay will be after pension contributions than it could before.

The approach I’ve taken is to take the percentage you enter into the pension field and deduct that percentage from the standard annual salary (i.e. not including any overtime). Therefore, the calculator is assuming that your pensionable pay is the same as your annual salary. If your employer calculates it differently I’m afraid that this estimate won’t be accurate, but it should give you a good indication. Sorry I couldn’t make it more accurate! Get started on The Salary Calculator with pension contributions.

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About The Salary Calculator, Pensions

None of the content on this website, including blog posts, comments, or responses to user comments, is offered as financial advice. Figures used are for illustrative purposes only.

58 Comments to Pension contributions on The Salary Calculator

  1. Found the calculator extremely useful.
    However, one of the things I’m trying to do is calculate how much AVC contribution I need to make to keep my taxable pay under the 40% threshold.
    It would be really useful if the calculator offered some sort of ‘flag’ to indicate whether the calculation included some tax in the 40% band. Then by increasing the pension % until the flag dropped I could find the answer easily.

    Many thanks.

    2. John Stevens on November 19th, 2009

  2. That’s an interesting thought, John, and I can see a couple of ways to go about it. In a post about new April 2010 tax rates I explained that early next year I’ll be updating the calculator. I will see if I could include some kind of indicator then.

    3. admin on November 19th, 2009

  3. it would be great if the calculator could deal with salary sacrifice (http://www.hmrc.gov.uk/specialist/salary_sacrifice.htm) pensions, as this affects the amount of NI and I.T. paid

    4. Andrew on December 23rd, 2009

  4. Hi

    Your site is fantastic, but if you can help me with this question, i would be really grateful.

    Just got a job, i start in 5 weeks, the salary is 30k, and they will contribute 13% pension. I dont kbwo if that means i will have to contribute 13% also?

    If it is yes, that would decrease my salary by 3900, would the tax releif cover that?

    5. Ali W on June 5th, 2010

  5. Hi Ali,

    In my experience, when a company says that they will contribute a certain percentage to a pension, it normally means that they will contribute the same percentage that you agree to contribute, up to a maximum (in this case 13%). In that case, if you chose to contribute only 6% (say), they would also contribute 6%. However, each company handles these things differently so the best thing to do would be to ask the HR or Payroll department to explain it to you.

    In my blog post above, I explained that amount contributed to the pension is sometimes not as simple as just a percentage of the gross salary (see above), but if it is then 13% would indeed be £3,900 per year. The tax relief would cover this, but it does mean that your take-home pay does not decrease by £3,900 per year. Use the Salary Calculator to see what difference it would actually make to you each month, although as before you would need to check with your employer to see exactly how they calculate the amount to deduct.

    I’m sorry I can’t be more helpful, but because not everyone’s employer handles pension contributions the same way, the Salary Calculator can only give you an indication of what the impact might be.

    6. admin on June 6th, 2010

  6. Please could you tell me where the pension field is on the salary calculator?
    l have previously used this calculator with the
    pension field but it seems to have been removed.

    7. KJ on August 13th, 2010

  7. Hi KJ,

    The pension field is still there but is not in quite the same place. I have tried to tidy up the calculator and have put the pension and overtime fields into an “Advanced” section. Underneath the field where you enter the salary (or the hourly rates) there is now a link “Show advanced options…” – if you click on this you should see it expand to show you the pension field.

    8. admin on August 13th, 2010

  8. Yes, if you place the cursor on the top field of the advanced options and press “Tab” this will eventually take you down to the pension information fields.

    9. Paul on September 2nd, 2010

  9. Hi,

    I was hoping for some advice after using this site.

    I have a tax code of 810L, Annual Salary of £21275 and a bonus of £77.73 (one off). My ‘take home’ on my pay slip is £1444.70 but this sites calculator advises it should £1469.57.

    Can anyone advise why there is a difference?

    I also contribute £42.55 monthly to a pension but I was under the impression this was tax free.

    Thanks,

    10. Michael on October 2nd, 2012

  10. Hi Michael,

    Does your payslip show the deductions for this month so you can compare with the deductions on the calculator and see where the difference lies? It might be that your employer considers bonuses to be “pensionable”, and therefore they’ve increased your pension contribution in line with your extra income this month. The calculator doesn’t do this, as not all employers do.

    I hope this helps!

    11. admin on October 2nd, 2012

  11. Hi,

    The only deductions my pay slip refers to are National Insurance, Tax & Pension.

    The extra money isn’t really a bonus but a payment for doing a sleepover in work.

    I’m not sure what you mean when you advise to compare the deductions on the calculator.

    Any further guidance would be appreciated.

    12. Michael Paton on October 7th, 2012

  12. Hi Michael,

    What I meant in my suggestion was to compare the values that are deducted for tax, NI and pension in your payslip with those that are shown by the calculator. This would help explain where the discrepancy lies. For example, I have just checked your figures in the calculator, and I can only get a take-home of £1469.57 by missing out the pension deduction. If I add your pension deduction (which appears to be 2.4%) to the “pension” section of the calculator, in a bonus month the Calculator thinks you should take home £1454.95, which is closer to what you have been paid.

    The remaining £10 might be because your employer has worked out your tax and NI as if you were getting this bonus every month, which would lead to you having to pay more tax over the year. This happened to me once, and my employer reduced my tax the following month to correct for it. If you are unsure, your manager or HR department should be able to explain the deductions to you.

    13. admin on October 8th, 2012

  13. Thanks for your input – makes more sense now.

    14. Michael Paton on October 12th, 2012

  14. I have put my new tax code into the calculator and the discrepancy with my wage slip is exactly my pension contribution.
    The calculator adds the pension contribution to my tax allowance, effectively removing it from taxable pay whereas on my wage slip it is taken after the tax calculation based on my tax code has been done.
    My tax code includes an amount for tax relief on my pension and was under the impression that pension contributions are taxable, so I don’t know why on the calculator it is being treated as not taxable.

    Can you advise? Many thanks

    15. Debbie on February 23rd, 2013

  15. Hi Debbie,

    There are a couple of different types of pension, with different tax and National Insurance implications. The Salary Calculator at the moment only supports occupational pensions, where the payment is made before tax is deducted.

    It sounds like your employer might be making contributions for you into a personal pension scheme, where the contributions are taxed but you get some tax back from the government. Some information explaining the difference is available here: http://www.nidirect.gov.uk/tax-relief-on-pension-contributions

    If you are unsure, your employer’s HR or payroll department should be able to explain your deductions.

    There is another type of pension contribution known as a salary sacrifice pension – this has slightly different tax implications again. I do plan to add these different types of pension to the calculator but for the moment I’m afraid it is not able to work these out.

    16. admin on February 25th, 2013

  16. Yes, my employer is making contributions for me and I should receive tax back through my tax code.

    Thanks for clarifying this, I have found the site very useful.

    17. Debbie on February 25th, 2013

  17. I have found the salary calculator very useful and much more accurate than similar offerings on the web.

    With regard to overtime though it assumes a 37.50 basic week whereas we are lucky enough to only work 37.00! Would it be possible at some stage to have to input basic full time hours equivalent for a more accurate calculation?

    Best wishes

    Lena

    18. Lena Campbell on June 10th, 2013

  18. Hi Lena,

    Thanks for your feedback! I would like to add the option to input the number of “normal” weekly hours worked, as you suggested, but the problem I keep finding with this (and other ideas) is that it’s difficult to find space on the calculator without having to rearrange everything! I have recently been asked to make a couple of other improvements, though, which might mean I can re-jig everything to fit this option in too. In the meantime, you can do it using the hourly wage calculator. I know it’s a bit of a pain, but if you know your normal hourly wage (or work it out from your salary), you can enter it in here along with 37 hours per week, and the calculator will work out your overtime as you expect.

    19. admin on June 10th, 2013

  19. So exactly how many ways can pension contributions be calculated? Surely not that many so wouldn’t a calculator based on each method be an easy solution?
    Maybe I’m missing some magical equation or is it a way of keeping the whole thing mystical afterall its purely mathematical.

    20. Rob on October 18th, 2013

  20. Hi Rob,

    You might be surprised! The Salary Calculator currently supports 5 different pension calculations (Employer pensions and Salary Sacrifice pensions, each of which can either be contracted out or not, and personal pensions, which can’t). This covers the major types of pension calculations, but they all require “pensionable pay”.

    As explained in the article I linked to above (click here), employers can use almost any definition of “pensionable pay” they like, so giving options for all the different types isn’t possible. In the article, there is a (non-exhaustive) list containing 7 possible options – to include just these options would bring the total number of calculation types from 5 up to 640!

    21. admin on October 18th, 2013

  21. Hi,
    I like your take home calculator and I am just after a bit of advice. My company takes my pension out after tax and then the tax is refunded back into my pension pot. I am moving into higher rate tax bracket but only 20% is refunded what will happen to the other 20%?

    22. Jake edwards on December 19th, 2013

  22. Hi Jake,

    Your employer, or whoever operates the pension scheme, should be able to tell you exactly what will happen when you are a higher rate tax payer, but probably you will have to claim back the extra tax paid from HMRC. You can do this either through your tax return or by simply contacting them. This page on the HMRC website explains how some companies manage their pensions like personal pensions, and the “Personal Pensions” heading provides a bit more detail.

    23. admin on December 19th, 2013

  23. 18k per year after tax plus part time job at 8.25 per 24 hours a week? how much would it be?

    24. gabriele on June 29th, 2015

  24. Hi Gabriele,

    Firstly, I’m sorry it took me so long to reply to your comment. Secondly, I’m sorry that I don’t have an answer for you – at the moment, The Salary Calculator doesn’t have the facility to work out the take-home pay if you have two jobs like this. It is in the plans to be added in the future, but I don’t know exactly when, and right now I’m afraid I can’t help!

    25. admin on July 5th, 2015

  25. Where could I find typical percentage pension deductions? For example I recently worked for the NHS and the percentage was 9.3%. Are other public sectors similar? eg teaching, university role etc.

    Thank you!

    26. Sally on July 10th, 2015

  26. Hi Sally,
    I’m afraid I don’t know where you might find this information – I didn’t find it immediately when doing a quick Google search, although I’m sure it’s out there. If it helps, I had a private sector job a few years ago where the pension contributions were 9%.

    27. admin on July 10th, 2015

  27. Hi Admin! Sorry: I can’t see any name listed for you.

    Thanks so much for your reply. I appreciate you taking the trouble to make a quick search for me. I had done several and not turned up anything myself so it’s good to know I haven’t missed the bleedin’ obvious.. I’ll let you know if I find out! Thanks for the 9% example from private sector: it’s so near to my public sector 9.3% that it sounds as if I’m in the right ballpark: really helpful and enough for now.

    Can I just say I do use the pro-rata salary calculator all the time: it’s a brilliant tool and has reduced the job search stress on many many occasions.

    Thank you

    Sally

    28. Sally on July 14th, 2015

  28. Hi There,
    I am considering a change of job from public sector to private. I was using the calculator to see what what happen at £100K and 40% to pension. It is coming up with take-home of £25,467 plus £8,000 tax refund = £33,467 if I contribute to a personal pension and £41,467 if an employer salary. Is this right? Is it really punished this much to have a personal pension?
    Thanks
    Paula

    29. Paula on August 8th, 2016

  29. Hi Paula,
    There is another factor to consider – with a personal pension, the basic rate tax relief is paid into the pension by HMRC (your refund would be of the higher rate tax). In order, therefore, to have £40k in your personal pension, you would only need to contribute £32k and the rest would be made up by HMRC. If you enter this in to the calculator, you should see that the take home (once you receive your higher rate tax refund) should be more in line with the Employer pension approach.
    It might be beneficial for you to discuss the options with an independent financial adviser, to make sure that all aspects of your personal situation are considered.

    30. admin on August 8th, 2016

  30. Hi There, I am just wondering is there a maximum that I can ask my employer to deduct in pension contributions, just wondering if this has any implications on take home pay.
    Thanks Veronica

    31. Veronica on September 20th, 2016

  31. Hi Veronica,
    There are a couple of limits which are placed on the amount you can put in to a pension in a tax year and still claim tax relief:

    • Your contributions can’t be more than you earn in the year
    • There is an annual limit (currently £40,000, might be reduced if you earn over £150,000) to how much you can contribute, although unused allowance can be carried forward
    • There is a lifetime limit of £1,000,000 – once you have paid this much in, you can no longer claim tax relief

    n.b. All contributions, including employer contributions and tax relief paid into the pension, count towards the limits. More detailed information is available from HMRC here.

    32. admin on September 20th, 2016

  32. Hi, I recently took a full time position after many years of contracting, this was a shock to the system but I can’t get my head around tax effective salary sacrifice. My hourly rate was converted into a salary and with company car I have a total taxable income £90k+19k car benefits tax code KI906 only contributed 1% to my pension as I wanted to make salary sacrifice to pension to get max tax relief but it looks as though I don’t get any of my tax free allowance anymore so how can I sacrifice a value that will return my best or most efficient tax position. Please let me know your thoughts or suggestions to maximise take home pay, pension contributions etc.. cheers

    33. Paul on June 14th, 2017

  33. Hi Paul,
    It sounds like you should speak to an independent financial adviser for help on exactly which pension option would be most suitable for you. Your K tax code means you don’t get the tax free personal allowance (it looks like it is used up by the car benefits), but whatever your personal allowance, paying in to a pension will reduce your taxable income and therefore the tax due. Different kinds of pension (employer schemes, salary sacrifice, personal pensions) each work in a slightly different way, and there are limits to what you can contribute to a pension scheme and still claim tax relief – a financial adviser would be able to talk through the options with you and help you make the decision.

    34. admin on June 15th, 2017

  34. I am disappointed that the percentage calculator button has been removed from the Salary Sacrifice option to calculate my AVC. As my hours change weekly it was a great option for me as the total amount varies monthly.

    35. Laura on November 1st, 2018

  35. Hi Laura,
    None of the options have been removed, you can still enter a percentage value for a Salary Sacrifice pension – just go to the “Pension” tab, enter the percentage in the contribution field and choose the “Salary sacrifice” pension type.
    I hope this helps – please let me know if I’ve misunderstood your question!

    36. admin on November 1st, 2018

  36. We use a salary sacrifice auto enrolment pension scheme which deducts the NI primary threshold before calculating pension deduction. When I enter a percentage in the pension tab and select auto enrolment it is not giving salary sacrifice relief when calculating national insurance and student loan, it is calculating these on the full salary. It is giving relief when calculating tax. What am I doing wrong

    37. Gerard Graham on March 7th, 2019

  37. === Update 12th March 2019 ===
    The calculator has been updated to allow you to do this. Now, you can choose “Salary Sacrifice” as the type of pension, and use the drop-down box to choose to work out contributions on “Qualifying Earnings”, which is how auto-enrolment pensions work. It is also possible to include overtime and bonus payments in these calculations. More information here: Enhanced pension options
    === Original response follows ===
    Hi Gerard,
    I’m afraid the calculator can’t do what you’re trying to do (yet!). If you choose the “Salary Sacrifice” pension type, you will see that the National Insurance and Student Loan amounts will have the relief applied as well as the income tax. However, the percentage will be calculated on the whole salary, not that above the threshold. You could try to get a close answer by modifying the percentage so that the pension deduction matches what you actually pay, but I realise this isn’t an excellent solution.
    I am working on adding more options to the Pension tab, which will allow calculations like yours – the bit that takes the time is making them as easy to use as possible. I will announce here when these new options have been added.

    38. admin on March 8th, 2019

  38. Hi
    I am being made redundant and have been told I will be receiving 4 weeks notice. My working pension rate deducted is 5%.on my final wage can I ask for my pension not to be deducted at all?

    39. Craig on June 18th, 2019

  39. Hi Craig,
    I’m afraid I have no experience of this situation, I don’t know whether that is possible. If your employer’s HR or Payroll department aren’t able to answer this question for you, you might get an answer at Citizens Advice.

    40. admin on June 18th, 2019

  40. Hi,
    I find your calculator very useful but it would be nice to be able to put in my employer’s contribution to my pension also. This would just allow the total contributed to the pension to be displayed in the final calculation, in addition to my contributions.

    41. Terry on June 23rd, 2019

  41. Hi Terry,
    Pleased to hear you find the calculator useful! Your suggestion of adding employer pension contributions is actually already on my “to do” list – I’m not sure when it will get added, as the list is quite long, but I will get around to it, I promise!

    42. admin on June 23rd, 2019

  42. Thank you for your very helpful calculator. I want to use it to calculate where the employer contributions are 6% and employee contribs are 8% to an occupational pension (managed by aviva). Will entering the aggregate of employer and employee contributions (14%) with the ‘auto-enrollment’ button checked produced the correct calculation, please?

    43. Simon on October 6th, 2019

  43. Hi Simon,
    I’m afraid it won’t – at the moment, the calculator doesn’t have space for employer contributions to pensions. However, since employer contributions aren’t deducted from your pay and don’t affect your tax and National Insurance, if you enter just the employee contribution of 8% you will get the correct calculation.
    To see what the total contribution to your pension is, including the employer’s 6%, you can enter 14% and the pension deductions will show you this total – however, the rest of the calculation will be wrong.
    My “to do” list does have employer contributions on it, but as they don’t affect take-home pay I haven’t added them to the calculator yet.
    I hope this helps!

    44. admin on October 8th, 2019

  44. Hello
    It would be great to have an option to add in when you would like to pay in a lump sum to your company pension, for instance when you get a bonus. So, when you pay say 6% pension contribution every month and then some months an extra £500. I am finding it hard to calculate the 6% as it would appear in your calculator and add on the lump sum. Your calculator has either % or £, what would be great would be to be able to put in both. Thanks.

    45. Sarah on March 22nd, 2021

  45. Hi Sarah, thank you for your comment. You’ve made a good suggestion, it
    would be tricky to implement but we’ll do it if we can!

    46. Editor on May 17th, 2021

  46. Hi,
    I’m hoping for some advice as I have looked everywhere and inconsistent information has my mind boggled… my husbands take home pay on his payslip is £1425 but his employer reports this to universal credit as £1471 (this amount includes his pension) would you be able to advise which is correct? Should his take home pay include his pension or not ? HMRC are telling me different things depending upon who I speak to. I’m going to speak to my financial ombudsman but a little clarity would be fantastic and your site seems fab for that. Thank you

    47. Michelle Hood-Smith on April 3rd, 2022

  47. Hi
    It would be useful if the pension tab would allow you to enter both employer pension deductions plus any personal pension payments at the same time. Is this already possible?
    Many thanks
    Colin

    48. Colin on October 22nd, 2023

  48. Hi Colin,
    It’s not possible to do this at the moment, no. I can see how it would be valuable but it would be difficult for me to add a second pension type so you could do personal contributions at the same time. I’ll have more of a think about it and see if I can work out how it could be added.

    49. Admin on October 24th, 2023

  49. Hi
    Thanks for your reply. It occurred to me after messaging you that I could change my tax code to reflect any personal contributions? I assume that this might not be totally accurate but would at least give you an idea.
    Many thanks again
    Colin

    50. Colin Neville on October 28th, 2023

  50. Changing the tax code would help you to see the difference in tax, but the tax saving for personal contributions is paid into your pension pot (at basic rate) so it would not give you a very clear idea of what is going on. On the “Additional Options” tab you could enter your personal contributions under Other Deductions, using the “before tax” field, although this would give you the impression you were keeping the tax saving rather than it being put into your pension. You could use the “after tax” field, which would show you your take-home pay, but again wouldn’t show you the tax saving going into your pension pot. None of these options are perfect, I’m afraid.

    51. Admin on November 1st, 2023

  51. Thanks again.

    52. Colin on November 6th, 2023

  52. Hi

    When I put in my annual salary and then put the percentage of pension, the non-taxable pay does not match. eg on salary of around 120k and 10.5% pension contribution the non taxable salary should be reduced by just over 1k a month. In the calculator it reduces non taxable salary at around 1.8k a month. This doe snot correlate to the percentage. Have missed something?

    Thanks

    53. Jay Kay on February 18th, 2024

  53. I just wanted to reiterate what a great website this is. Thanks. Very useful especially in Scotland, with our more complex and higher tax rates.

    54. Rob L on February 22nd, 2024

  54. Hi Jay,
    It’s not only your pension that reduces the taxable pay, but also your tax-free personal allowance. Although yours will be reduced for earning over £100k, it will still be affecting the amount of income on which tax is due. The default personal allowance (for those earning under £100k, anyway) is currently £12,570 per year.

    55. Admin on February 26th, 2024

  55. My understanding is that my pension is deducted after tax. The pension company then claims that tax back and adds it to my pension? Certainly appears to be the case comparing your calculation to my payslips as the income tax does not match which I believe is due to this. Is there an option available or that could be made available?

    56. Rich on April 2nd, 2024

  56. Hi,
    First of all, just want to say this is a great website!
    Can you please confirm if your pension calculation is correct though?
    For example, if you enter £25,000 as an annual salary with a 5% auto-enrolment, it shows the pension contributions as £938 annually; if you do that on a calculator (£25,000 * 0.05) it comes to £1,250.
    £938 is equivalent to 3.75%, not 5%.
    Am I missing something or is the calculation wrong?
    Thanks

    57. Adam on June 22nd, 2024

  57. Hi Adam,

    Auto enrolment pension contributions are not calculated on your gross salary, they are calculated as a percentage of what you earn between two thresholds, currently £6,240 and £50,270. £938 is 5% of £25,000 – £6,240. More information is under the Pensions heading here: https://www.thesalarycalculator.co.uk/about.php

    58. Admin on July 1st, 2024

  58. Hi Rich,

    This seems to be increasingly common for company pension schemes and I need to update the site to make it easier to do. Currently you can do it by choosing a Personal Pension on the pension tab – this gives you the results you expect although I realise it is not intuitive for an employer pension!

    59. Admin on July 1st, 2024

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