Are you ready for this pension contribution increase?

On April 6th, 2019, the total minimum pension contribution increases from 5% to 8%. By law on this date, you must increase the amount of minimum contributions into your staff’s automatic enrolment pension to at least 3% of qualifying earnings.

Members of staff will need to pay the shortfall to make the total minimum contribution up to 8%, including your contribution.

Date effective Employer minimum contribution Staff contribution Total minimum contribution
6 April 2019 onwards 3% 5% 8%
Current rates, from 6 April 2018 to 5 April 2019 2% 3% 5%
Historic rates, up until 5 April 2018 1% 1% 2%

Important points to note:

  • You don't need to take any further action if you don't have any staff in a pension scheme for automatic enrolment, or if you are paying above the increased minimum amount.
  • You can choose to pay the full amount of the total minimum contribution, which could mean your staff do not need to pay in at all, unless the scheme's rules say that they have to make contributions.
  • It is worth noting, that both you and your staff can choose to contribute more than the minimum amounts to the pension if you want to.
  • The increase in minimum contributions should be simple to do, but you need to get ready for 6th April and for these new rates coming into effect.
  • You need to check with your Payroll provider to make sure they are ready to calculate and deduct the increased contributions.
  • All pension schemes should already be making the changes which are necessary for this increase, but it is still your responsibility as an employer to make sure you are using a qualifying scheme for the automatic enrolment duties, and that the correct amount of pension contributions are deducted.
  • If you operate a qualifying [if not then the DB scheme should have been transitioned now] Defined Benefit scheme, the contribution increases do not apply and you don't need to take any action.

If you need further advice on this or any other Payroll services, don't hesitate to get in touch with us today.

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