How to calculate Pension Contribution Costs with Horizons in the United Kingdom (UK)?

At Horizons, we offer both Nest and Aviva pension schemes, each with its own method for calculating contributions. Here's how you can calculate the contribution costs for each scheme.

Aviva Pension Scheme

  1. Based on Total Pensionable Earnings

    • Contributions are calculated on basic annual pay, excluding bonuses and commissions.

  2. Example:

    • Salary: £45,000
    • Contribution: 3% of £45,000 = £1,350/year
    • Monthly Contribution: £112.50

  3. Higher Contributions

    • If you wish to offer more than the statutory minimum, Aviva allows for higher employer contributions.

Nest Pension Scheme

  1. Based on Qualifying Earnings

    • Contributions are calculated on earnings between £6,240 and £50,270, covering salary, bonuses, and statutory payments.

  2. Example 1:

    • Salary: £55,000
    • Qualifying Earnings: £44,030
    • Contribution: 3% of £44,030 = £1,320.90/year
    • Monthly Contribution: £110.07

  3. Example 2:

    • Salary: £45,000
    • Qualifying Earnings: £38,760
    • Contribution: 3% of £38,760 = £1,162.80/year
    • Monthly Contribution: £96.90

  4. Minimum Contributions Only

    • The Nest scheme only allows for contributions at the statutory minimum level.

Key Points

  • Aviva Scheme: Ideal if you want to offer contributions above the statutory minimum.
  • Nest Scheme: Contributions are capped at the statutory minimum.
  • Earnings Cap: Nest contributions consider earnings up to £50,270.

For more details or specific scenarios, Horizons is here to assist.

Was this article helpful?

That’s Great!

Thank you for your feedback

Sorry! We couldn't be helpful

Thank you for your feedback

Let us know how can we improve this article!

Select at least one of the reasons
CAPTCHA verification is required.

Feedback sent

We appreciate your effort and will try to fix the article