The minimum contributions employers and employees pay into their automatic enrolment workplace pension scheme will increase as of 6th April 2019, due to phased scheme changes. If you are the employer in this equation, the onus will be on you to ensure these increases are implemented, as part of the Pension Act 2008.
Does this increase apply to you?
This phased increase will apply to all employers with staff in a pension scheme for automatic enrolment, who must ensure that at least the minimum amounts are being paid into their pension scheme.
This increase in minimum payments will cover pension schemes set up specifically for auto enrolment, as well as existing pension schemes.
No action will be required on 6th April 2019 if the following applies:-
- As an employer, you have no staff in a pension scheme for auto enrolment
- As an employer. you are already paying above the increased minimum amount
How are the new minimum amounts broken down?
Below you can see the existing minimum contributions and the new ones that come into effect in April 2019.
By law, a total minimum amount of contributions must be paid into the scheme, which will be 8% from 6th April 2019. This 8% will be made up from the employer contribution of 3% and the staff contribution of 5%.
If you decide to cover the total minimum 8% required, your staff won’t need to pay anything.
The exact figure you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme. Your staff contribution may also vary depending on the type of tax relief applied by your scheme. You can find this information in the scheme documents sent to you when you set up the pension scheme or you can speak to your pension provider.
The calculation for this type of scheme is based on a specific range of earnings and these figures are reviewed each year by the government.
For the 2018/19 tax year the qualifying earnings range is between £6,032 and £46,350 a year (£503 and £3,863 a month, or £116 and £892 a week). These figures are reviewed each year by the government.
When you are calculating contributions you should include the following, where applicable:
- Statutory sick pay
- Statutory maternity pay
- Ordinary or additional statutory paternity pay
- Statutory adoption pay
What you need to do now
It is your responsibility, under the Pensions Act 2008, to make sure the right minimum contributions are being paid for your staff.
We have an expert team of experienced payroll staff who can ensure your scheme is compliant and run like clockwork.