Normal scheme contributions are split into two areas:
Employee Contributions: These are decided at a national level, reviewed annually and are progressive in relation to different salaries.
Employer Contributions: Employer contributions are determined by each Fund actuary and, broadly speaking, they are set to fund the remaining amount needed to pay the benefits after employee contributions and investment returns have been taken into account.
Additional contributions may be due for a range of other circumstances, most of which relate to members who wish to top up their benefits.
Backdated pay?
Pay increases are often agreed and paid back to a date in the past, as an employer you must make sure pension contributions are deducted from any back dated pay and paid across to the Fund. If an employee retired or left prior to the pay award being agreed the employee may claim back any backdated pay you may owe them. If this situation occurs then you must pay across the additional contributions to the Fund and re-calculate the employee's pay (both final salary, if applicable & CARE) and submit this information to the Fund in order to re-calculate the employee's pension benefits.
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