Posts Tagged ‘Pension auto enrolment’

Pensions – minimum contributions to increase

Thursday, March 15th, 2018

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

Take a look at how we can help your business further.

minimum contributions

Minimum pension contributions to increase from April 2018

Thursday, August 24th, 2017

From April 2018, the minimum pension contributions made into auto enrolment schemes from employers and employees are to increase in two stages.

The increases are compulsory and it is the responsibility of the employer to ensure they are implemented correctly. The first increase is effective from 6 April 2018 and the second from 6 April 2019.

Who does this apply to?

All employers with staff in a pension scheme for automatic enrolment must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing pension scheme. The employee’s earnings and age will determine if enrolment into a pensions auto enrolment scheme is compulsory and the obligations of the employer in terms of contributions. For example, employees earning above £10,000 pa will need to to be enrolled into the company’s pension scheme if they are between 22 and state pension age.

No further action is required if you are already paying above the increased minimum amounts or you don’t have any staff in a pension scheme for auto enrolment.

What are the amounts?

The table below shows the compulsory minimum amounts and the date when they must increase:

Date                      Employer min.contribution        Staff contribution            Total min. contribution

Until 5/4/18                        1%                                                          1%                                          2%

6/4/18 – 5/4/18                2%                                                          3%                                          5%

6/5/19 onwards                 3%                                                          5%                                          8%

By law, a total minimum amount of contributions should be paid into the scheme. The employer must make a minimum contribution towards this amount and the employee must make up the difference. If the employer decides to cover the total minimum contribution, the employee won’t need to pay anything. The company must provide information to the Pension Regulator to show they are meeting their automatic enrolment duties and more on this can be found on the Pension Regulator website – http://www.thepensionsregulator.gov.uk/

To discuss your pension obligations and ensure your business is fully compliant with the new changes, please contact [email protected] or [email protected] or call 01527 558539.

Pension contributions to increase