Can a Limited Liability Partnership (LLP) Take Out Keyman Insurance?
Question asked by Peter Williams
As a business owner, I know that pensions are incredibly valuable to my staff. Some of my employees are not sure how much they have to contribute or how much I have to contribute as their employer. Could you clarify the minimum contributions for both parties?
By law, you as the employer are required to pay a certain contribution to your employee’s pension pot. They also have to contribute. The government has set this as 8% of your employee’s qualifying earnings. The qualifying earnings for the tax year 2022/23 is between £6,240 and £50,270 a year.
As an employer, you have to pay at least 3% of the 8%, but you can pay more if you want to further boost their pension fund.
After your 3% contribution, employees pay 5% of their earnings as standard. This can change if you decide to pay a higher percentage and they want to reduce their payments without going below minimum requirements. For example if you paid 6% into the workplace pension your employee would only need to pay 2% to reach the minimum contribution amount.
1% of the employee’s 5% contribution is tax relief provided by the government.