Monthly Archives: January 2018

When Will Auto Enrolment Contributions Increase?

The minimum contributions rates for automatic enrolment are set to increase from 6 April 2018 and again from 6 April 2019. Employers will be required to increase the amount of their contributions into their employees’ automatic enrolment pension scheme. Employees’ own contributions will also increase.

 

The table below explains:

Date effective

Employer minimum contribution Employee minimum contribution

Total minimum contribution

Currently until 5 April 2018

1%

1%

2%

6 April 2018 to 5 April 2019

2%

3% 5%
6 April 2019 onwards 3% 5%

8%*

*subject to scheme set-up

Pensions Act 2008, every employer in the UK with at least one employee must put certain staff into a pension scheme and contribute towards it.

All employers that were in business prior to 30 September 2017 had a staged approach to auto-enrolment. However, since 1 October 2017, all new businesses have had to introduce a pension scheme immediately within the minimum 2% contribution level (usually split 1% employer and 1% employee).

What should you do to prepare?

Employers must act to ensure they are prepared to implement the increases correctly to all affected employees.

Employers should review contracts and pension announcements to see if the increased contributions apply automatically to their workers and employees.  If not, then employers may need to consider changes to contracts to increase member contributions which can also trigger a minimum 60-day consultation before the change can be made.

Future rises

The contribution levels will continue to rise until the employer is paying a minimum of 3% towards the pension and the total contribution reaches at least 8% – with the employee making up the rest.

Contact us

If you need advice on understanding these increases, implementing changes or help with any of your auto enrolment needs please contact our wealth management or payroll team on 01254 679131.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.