AUTO-ENROLMENT FOR PENSIONS

Auto-Enrolment for Pensions - Increases in Contribution Levels

When the Government introduced mandatory Workplace Pensions, the minimum contribution levels began at a total of 2%, this is commonly split equally between the employer and employee, however they did include further phased increases in the minimum contribution levels.

The first of those increases will take place from 6th April 2018 with a further increase from 6th April 2019.

The minimum % amounts are shown in the table below:

Date effective Employer minimum contribution Employee minimum contribution Total minimum contribution

Until 5 April 2018

1% 1% 2%
6 April 2018 to 5 April 2018 2% 3% 5%
6 April 2019 onwards 3% 5% 8%

 

 

 

 

 

NB: The minimum contributions can be varied between employee and employer, providing the overall minimum contribution levels of 5% from April 2018 and 8% from April 2019 are met.

What if we process your payroll already?

It’s good news for clients using our payroll service as we will ensure that the contribution rates for all employees who are enrolled into your pension scheme are increased to the appropriate levels from the first pay period after 5th April 2018 and similarly in 2019. Where we are responsible for sending data to your pension provider, we will ensure that the relevant changes on the pension scheme are reported.

What action do I need to take as an employer?

The Pensions Regulator recommends that employers provide employees with advanced notice of the increases in contribution levels. To help you with that, we have created a template to use which can be addressed and issued to your employees – click here to download

What if I am processing my own payroll?

Depending on which payroll software you use, you will need to ensure that the appropriate changes are made to affect the contribution increases detailed above. Your payroll software provider should be able to offer guidance with that process.

Alternatively, if you would prefer not to have to deal with these changes yourself, you may decide that this is an appropriate time to consider outsourcing your payroll. There are many advantages to having your payroll processed by a professional payroll bureau, not least that you won’t have to spend as much time keeping up to date with legislative changes of this nature.

If you would like a quotation please contact us and we will be happy to explain all the benefits of using our payroll bureau service.

Should you require more information on Automatic Enrolment and the increases in contribution level please email This email address is being protected from spambots. You need JavaScript enabled to view it. or your usual payroll contact here.