On 6th April 2018 employers with auto-enrolment duties will be required by law to increase the contribution they make to staff auto-enrolment pensions.
The current minimum levels are 2% of qualifying earnings in total, which in most cases will include 1% from the employer, and 1% from the employee (in some cases employers have chosen to contribute the full amount with none being paid by the employee, and in these circumstances the employer must contribute the full increase themselves).
These are increasing from 6th April to become 2% from the employer and 3% from the employee, a new minimum total of 5%.
For those clients where we assist in payroll and auto-enrolment duties we will be implementing this change for you in April payrolls.
There is no legal requirement to let employees know of this increase, as their original letters will have explained the increases over time, but you may wish to consider reminding them and we can provide a letter template if required.
Who is excluded
These increases do not apply to employers who do not currently have any staff enrolled, or to those who are already paying above the minimum amounts.
They also do not apply to staff who have opted out of automatic enrolment.
Further pension contribution increases planned
From April 2019, there will be a further increase, to 8% in total (3% employer, 5% employee).
Would you like help and advice on this or any other issue?
Contact us straight away by telephoning 01932 564098 or email us using our ‘Contact Us’ page.
This note was published in February 2018 – please be aware that the information above may have changed in subsequent months. This note is written for the general interest of our clients and is not a substitute for consulting the relevant legislation or for taking professional advice.