How much do the parties pay into the scheme?

There are minimum levels of contributions that must be paid to the pension by both the employer and the employee, though these limits are set to increase between now and 2018. The government will also pay into the pension by giving tax relief on the contributions. The minimum total contribution to the scheme is based upon ‘qualifying earnings.’ This refers to earnings before income tax and National Insurance contributions are deducted. The minimum total contribution is a percentage of the qualifying income. The employer will initially pay 1%, rising to 2% and then 3%. The employee pays 0.8% rising to 4%. The government pays 0.2% rising to 1%. From October 2018, therefore, in total 8% will be paid into the scheme

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