CASE STUDY: JOHN*
John has pensionable earnings of £12,000 a year (£1,000 each month). This is his gross basic salary.
His employer's pension scheme uses the following percentages to calculate the contributions: John pays in 4 per cent of his gross basic salary. His employer pays in an amount equal to 3 per cent of John's gross basic salary. The government contributes in the form of tax relief equal to 1 per cent of John's gross basic salary
Therefore, although John puts in £40 a month, the total contribution to his pension is £80 a month.