Rules for calculating National Insurance
There are two different formulae for calculating the employer's National Insurance contributions. Both are based on the annual basic salary.
1. University Pension Schemes (Contracted-Out)
This relates to people (the majority of staff) who are a member of one of the University's superannuation (pension) schemes, and is what is used to calculate the figures in the salary scales in these files.
Example:
- A technician on the first point of Grade D will have a salary of £16,071.
- For someone in a University pension scheme, using the salary tables, their employer's costs are £3,696 (superannuation) and £1,017 (NI), giving a total of £20,785.
2. Non University Pension Schemes (Non-Contracted-Out)
This relates to people who are not a member of a University superannuation scheme, either because they have a private pension scheme, or no scheme at all. In this case, there is no employer's superannuation contribution, but the employer's NI contribution is higher. The NI contribution is based on a percentage of the Annual Salary, dependent upon the salary being in a particular range. The following table shows the Salary Ranges and Percentages to use (Fiscal Year 05/06).
Annual Salary Range Percentage
- less than £4,895; 0%
- £4,895.01 or more; 12.8%
These salary ranges and percentage rates usually change at each (government) Budget.
Example:
- Technician on first point of Grade D, with salary of £16,071.
- For someone not in a University pension scheme, the employer's NI cost will be £1,431 (being 12.8% of £16,071-4,895), giving a total cost of £17,502.
