What will it cost?

For the first five years up to the end of March 2018 both the employee and employer contribute 1% (2% in total) of qualifying earnings. The employee is entitled to tax relief at source on their contributions so their contribution will actually be deducted as 0.8% which will show on their payslip.

This will then increase from April 2018 to a total pension contribution of 5% (employers must contribute at least 2%).

From April 2019 onwards, the total minimum contribution will be 8% with the employer having to contribute at least 3%. The difference between what the employer must pay and the overall minimum contribution is made up by the employee offset by a reduction in tax liability.