On 6 April 2018, by law, the minimum amount employers have to pay into workplace pensions goes up to 2% of qualifying earnings, while staff will now contribute 3% – making a combined total minimum contribution of 5%.
Automatic enrolment has so far put more than nine million workers into workplace pension schemes.
All of these people are now on the road to saving for a better retirement, but it’s only the start.
Now that they’re saving for their future, the next step in automatic enrolment is for the amount staff pay into their pensions to increase, helping them to gradually adjust to saving money for their pension pot. Employers pay more in too, growing it even further. In fact, if they want to, employers can contribute more than the minimum amount they’re required to, meaning staff don’t need to pay in quite as much – as long as the total contribution is still at least 5%.
Employers should contact their pension provider and payroll team to check that arrangements are in place to pay in these new amounts from 6 April. We recommend that they write to staff to let them know about the increase in contributions,The Pensions Regulator has letter templates available to help.
Minimum contributions will increase again on 6 April 2019, to 3% for the employer and 5% for staff, making a combined total minimum amount of 8% of qualifying earnings. Rates will then stay at this level, unless the government makes changes to automatic enrolment in the future.
For more information on our Auto Enrolment service or any other services we offer please email Gillian.niven@drummondlaurie.co.ukor call Gillian on 01324 441280