Do contributions to occupational pension count towards permitted work limit?

Hi there,

(I just submitted this question but added some more info so submitting again - thanks)

I am not currently paying into an occupational pension and do not have one. But I want to start one. I am terrified that I have no pension so I would like my permitted work employer to start paying into one for me if this does not affect my ESA.

I cannot find much/any info as to whether contributions by
a) myself or
b) my employer

are regarded as counting towards the permitted work limit. Please can you help.

Regarding my own contributions, I found this info:
"V4030 Deduct from the employee’s gross earnings for a normal pay period one half of any amount
which:
1. a person pays into an occupational pension scheme for that period or
2. is deducted by the employer from a payment of earnings as a contribution to an occupational pension
scheme for that period or
3. a person contributes towards a personal pension scheme for that period."

Source: assets.publishing.service.gov.uk/governm...ile/977332/admv4.pdf
(there's no date on this document, but this briefing paper from 2017 says the same thing - researchbriefings.files.parliament.uk/do...BP-7909/CBP-7909.pdf)

So, Does this mean that if I contribute £50 p/month to my occupational pension, £25 of that will be counted as part of my permitted work limit for the month?

Does this also count for employer contributions? So my employer contributes £40 does £20 of that need to be counted as part of my permitted work limit too? That's not clear from either document.


There's also this source, which says something contradictory - www.legislation.gov.uk/ukdsi/2013/9780111531877
this says:


2) “Earnings” are not to include—

any occupational pension (which means any pension or other periodical payment under an occupational pension scheme but does not include any discretionary payment out of a fund established for relieving hardship in particular cases);"

I'm guessing that means employer contributions? Or does it mean employee contributions?
But This document is from 2013 - so is it still relevant, or superceded by the documents above?

Please can you advise!

Also, importantly, I also need to know whether the occupational pension will count towards my savings limit? (if I am receiving ESA-C with an ESA-IR top-up, which I think is what I am receiving but not sure)

Thank you so so so much for your help,
Chloe

Your permitted work earnings limited is net money, ie. Money after tax/ NI/ pensions have been taken out.

Hi Little Chloe, I think the meaning of 'earnings' in the legislation you last quoted is probably about a pension in payment, ie money paid TO you not contributions FROM you. Does that make sense?
Denby

Hi Gary,

thanks for your reply which I've only just seen. I'm new to navigating the forum and hadn't seen the replies to this thread!

I appreciate that advice on my specific case is outside the remit of forum. Perhaps my message was too detailed and specific.

But in essence, the general question I'm asking (which others on this forum may find helpful too) is:

a) Do employer contributions to an occupational count towards the permitted work limit?
b) Do employee contributions to an occupational count towards the permitted work limit?

Are you able to help me with this question?

Many thanks for your help,
Chloe

Hi Angel,

thanks so much for your reply which I've only just seen. I'm new to navigating the forum and looked to see if I had replies but I hadn't seen them until now!

I agree - it seems permitted work earnings are calculated after tax and NI but this paragraph I found in a legislation document says:

"For Permitted Work purposes, earnings are calculated in the same way as for income-related Employment and Support Allowance. Income tax, National Insurance contributions, half of any contributions to a private or occupational pension, and (in some cases) childcare costs are deducted when calculating earnings."

So this makes it sound as though 1/2 of pension contributions are still counted?

However, it's unclear as to whether that is employer or employee contributions or both!?

Let me know if you have any other thoughts - thanks so much
Chloe