From 6th April 2018, overall minimum contributions into qualifying pension schemes are set to increase. The minimum contributions are set to increase again from April 2019 and could represent a significant increase for some employees.
The current rates and contributions for the next 2 tax years are as follows:
Date effective Employer min. cont’n Staff cont’n Total min. cont’n
Until 5 April ’18 1% 1% 2%
6/4/18-5/4/19 2% 3% 5%
6/4/19 onwards 3% 5% 8%
Note that the employer must contribute a minimum amount and that overall a minimum level of contribution should be met. There is no requirement for the employee to contribute anything if the employer pays in full the total minimum contribution.
It can be seen however, that in many cases, employees will move from making 1% contributions to 5% in 2019. We are urging people to be aware of this and encouraging them to make provisions for these changes.
Both employers and staff are permitted to pay in more than the minimum contributions if so desired (with an upper limit of £40,000 contributions per annum).
It is important that if you operate a payroll scheme on behalf of your employees, that you ensure the correct rates are applied and the right amounts are paid into the qualifying scheme.
There are rules concerning pension schemes which aren’t qualifying and therefore cannot be used for automatic enrolment. We can help you understand these rules and if desired, ensure that you put measures in place to remain compliant within auto enrolment.
We can advise on your requirements under automatic enrolment and how the new pension rules affect businesses. Please contact [email protected] or [email protected] to understand your requirements and any actions you need to take.
Further information on pensions auto enrolment can be found on www.thepensionsregulator.gov.uk
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