Increases in minimum contributions for automatic enrolment pensions
On 6 April 2018, pension contributions under auto enrolment are increasing from the current minimum of a total contribution of 2% of qualifying earnings (of which at least 1% must be paid by the employer), to 5% of qualifying earnings (of which at least 2% must be paid by the employer). In April 2019, this rises again to 8% of qualifying earnings (of which at least 3% must be paid by the employer).
Both the employer and staff member can choose to contribute higher amounts to the pension if they wish. If the employer chooses to contribute more than their required minimum amount, then the employee only needs to make up the shortfall between the total minimum and the employer contribution. Early preparation is key to ensure a smooth transition.
The steps the employers should take are as follows:
- Employers must ensure that the pension scheme they use is a qualifying scheme.
- Communicate the necessary changes to employees
- Ensure the correct contributions are deducted
If you need any further advice please get in touch with your usual contact who can arrange for one of our financial planning consultants to speak to you.
If you would like to discuss the above blog in more detail, or you would like to speak with a member of our team, please contact Tracey Johnson or call 01772 821021 to be put in touch with a member of our Charity and Not for Profit team.