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 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.