Employer contribution rates
- England and Wales is 20.6%
- Northern Ireland is 16.3%
- Scotland is 20.9%
| Tier | Whole time pensionable pay | Current contribution rates |
|---|---|---|
| 1 | Up to £15,431.99 | 5% |
| 2 | £15.432 to £21,477.99 | 5.6% |
| 3 | £21,478 to £26,823.99 | 7.1% |
| 4 | £26,824 to £47,845.99 | 9.3% |
| 5 | £47,846 to £70,630.99 | 12.5% |
| 6 | £70,631 to £111,376.99 | 13.5% |
| 7 | £111,377 and over | 14.5% |
Pension contributions and tax
Pension scheme contributions are net of tax; therefore the true cost of the contributions is lower than the gross rates quoted above.
For higher rate tax payers, contributions at the rate of 12.5% would equate to a net 7.5%, contributions at the rate of 13.5% would equate to a net 8.1% and contributions at the rate of 14.5% would equate to a net 8.7%.
Part-time doctors
Part-time doctors are allocated to a tier based on their whole-time equivalent pay (apart from GPs, for whom there is no concept of whole-time equivalent). This may seem unfair at first reading.
The main legislation that governs the treatment of part-time workers is the Part-time workers (Prevention of Less Favourable Treatment) Regulations 2000.
This states that "A part-time worker has the right not to be treated by his employer less favourably than the employer treats a comparable full-time worker".
Let's consider two doctors
| Dr x | Dr Y |
|---|---|
| Earns £120,000 a year | Earns £60,000 a year |
| Works full-time | Works part-time |
Both would be allocated to tier 7 (14.5% contribution rate).
The reason for this is that Dr X is a 'comparable full-time worker' for the purposes of the regulations.
The remuneration of Dr Y is the same, for each hour worked, as it for Dr X thus there is no less favourable treatment.
If Dr Y were to be subject to a lower contribution rate (for example if actual pay was used and they paid 12.5%) then they would be being better remunerated per hour that their full-time equivalent colleague.