INCREASE IN WORKPLACE PENSIONS FROM 6 April 2018

The minimum amount that employer’s have to pay into a workplace pension scheme is increasing from 6^th April 2018 to a minimum of 2% of qualifying earnings.  Employees will contribute 3% ensuring a combined total minimum contribution of 5%.

More than 9 million employees, so far, have been auto enrolled into a workplace pension scheme, helping people save for their retirement.

The minimum contributions to be paid are required by law and as an employer you must ensure the minimum contribution is made by both yourself and the employee.  However, as the employer you can pay both minimum contributions if you so decide thereby the employee pays no contribution.

As an employer you need to ensure that your payroll and pension provider have put steps in place to pay the increased amounts from 6^th April.  It is recommended that employers write to staff informing them of the said increase in contributions.

These increases apply whether staff are paying into a pension scheme set up through auto enrolment or you are using an existing scheme.  No action is required if you have no employees in a pension scheme for auto enrolment or you already pay above the minimum required.

Further minimum increases will apply from 6^th April 2019 to 3% for employer and 5% for the employee, making a total combined minimum amount of 8% of qualifying earnings.  These rates will then remain unless the government in future make changes to auto enrolment.

Further information on minimum contribution increases can be found by clicking the link.

Source: The Pensions Regulator