An employer must pay which minimum proportion of the total ordinary annual contributions paid to its employer pension scheme?

An employer must pay which minimum proportion of the total ordinary annual contributions paid to its employer pension scheme?

• A. 50%
• B. 20%
• C. 33%
• D. 10%

Answer: (D)

The key idea is how the total annual contributions to an employer pension scheme are shared between the employer and the employee. The rule sets a floor for the employer’s portion: the employer must contribute at least a tenth of the total ordinary annual contributions. That means, no matter what the total contribution ends up being, the employer’s share cannot be smaller than 10% of that total. For example, if the total contributions in a year come to 1,000, the employer must contribute at least 100, with the remaining 900 coming from the employee (subject to any salary-sacrifice arrangements or scheme specifics). The other percentages would require a larger minimum employer share, which isn’t the rule described.

The key idea is how the total annual contributions to an employer pension scheme are shared between the employer and the employee. The rule sets a floor for the employer’s portion: the employer must contribute at least a tenth of the total ordinary annual contributions. That means, no matter what the total contribution ends up being, the employer’s share cannot be smaller than 10% of that total. For example, if the total contributions in a year come to 1,000, the employer must contribute at least 100, with the remaining 900 coming from the employee (subject to any salary-sacrifice arrangements or scheme specifics). The other percentages would require a larger minimum employer share, which isn’t the rule described.