Pension contributions: who pays what in 2026
Pension contributions are money paid into a retirement plan out of a worker's pay, by the employee, the employer or both. Whether the employer share is required depends on the country: UK employers must pay at least 3% of qualifying earnings under automatic enrollment, while in the US an employer 401(k) contribution is optional and Social Security takes 6.2% from each side instead.
Pension contributions are amounts paid from wages into a state or workplace retirement plan, either withheld from the employee's pay, paid by the employer on top of pay, or both.
On this page
Two kinds of pension contribution
State pension contributions are payroll taxes that fund a public pension. In the US that is the Social Security part of FICA. Covered employers must pay them; they are not optional.
Workplace pension contributions go into a plan tied to the job, such as a UK workplace pension or a US 401(k). Some countries make the employer share mandatory, others leave it to the employer.
| Country | Employer share | Employee share | Mandatory? |
|---|---|---|---|
| United States | Social Security 6.2% to $184,500; 401(k) match optional | 6.2% plus any 401(k) deferral | Social Security only |
| United Kingdom | At least 3% of qualifying earnings | At least 5% | Yes (automatic enrollment) |
| Germany | 9.3% to EUR 8,450 a month | 9.3% | Yes |
| Canada | CPP 5.95% (max $4,230.45) | 5.95% | Yes |
| Australia | 12% super guarantee | None required | Yes |
| South Korea | 4.75% National Pension | 4.75% | Yes |
Sources: SSA, GOV.UK, Deutsche Rentenversicherung, Canada Revenue Agency, ATO and countries.csv research, checked Oct 2026.
Worked examples
UK, GBP 30,000 salary. Automatic enrollment minimums apply to qualifying earnings between GBP 6,240 and GBP 50,270, so 30,000 minus 6,240 = GBP 23,760. Employer 3% = GBP 712.80. Employee 5% = GBP 1,188.00. Total 8% = GBP 1,900.80 a year.
US, $60,000 salary. Social Security is 6.2% x $60,000 = $3,720 from the employee and $3,720 from the employer. A 401(k) is extra: a 4% employer match would add $2,400, but no federal law requires it. The employee can defer up to $24,500 in 2026, plus $8,000 at age 50 or older.
Germany through an EOR, EUR 35,000. Employer pension insurance is 9.3% x 35,000 = EUR 3,255, billed by the employer of record in Germany on top of salary.
How pension contributions show on a pay stub
A US pay stub shows Social Security (sometimes OASDI) and any 401(k) deferral as separate lines. Traditional 401(k) deferrals come out before federal income tax but still count as Social Security and Medicare wages (IRS Publication 15). The employer match is paid on top of pay, not deducted from it. UK payslips show the employee pension deduction.
To set up a US plan, see 401(k) options for small businesses.
What this means for hiring costs
The employer pension share is often one of the larger items in the on-cost of a hire abroad: in Germany it is 9.3 of the 21.30 points. Compare it with other employer charges in the employer cost index by country or price a hire with the international employee cost calculator. For US hires, the employee cost calculator adds FICA, FUTA and state unemployment tax.
Frequently asked questions
Do employers have to pay into a pension?
What is an employer pension contribution?
Do you pay into a pension as an employee?
Are pension contributions taxed?
What is the minimum pension contribution in the UK?
Sources (9)
- GOV.UK: Workplace pensions: what you, your employer and the government pay (checked Oct 16, 2026)
- GOV.UK: Rates and thresholds for employers 2026 to 2027 (checked Oct 16, 2026)
- IRS: 401(k) limit increases to $24,500 for 2026 (IR-2025-111) (checked Oct 16, 2026)
- Social Security Administration: Contribution and benefit base (checked Oct 16, 2026)
- Deutsche Rentenversicherung: Sozialversicherungsrechengroessen 2026 (checked Oct 16, 2026)
- Canada Revenue Agency: CPP contribution rates, maximums and exemptions (checked Oct 16, 2026)
- Australian Taxation Office: Super guarantee rates and thresholds (checked Oct 16, 2026)
- Korea Legislation Research Institute: National Pension Act (English text) (checked Oct 16, 2026)
- IRS: Publication 15 (Circular E), Employer's Tax Guide, for use in 2026 (checked Oct 16, 2026)
This page is general information, not tax, legal or accounting advice. Rules and rates change, so check the official source linked above before you file or sign a contract. Read our disclaimer.