Auto enrolment – are you ready for increased pension contributions?
When pension auto enrolment was rolled out in the UK in 2012, the minimum contribution levels were set out by the government, along with plans for those contribution minima to be increased on a staged basis in the future.
The first staged increase will come into effect in less than six months’ time, on 6th April 2018.
If your auto enrolment scheme has contributions based on Qualifying Earnings (which the majority do) then the pension rules currently say that a minimum of 2% of Qualifying Earnings must be paid in contributions for all employees who are in the pension scheme. Of that 2%, at least 1% must be paid by the employer.
In April, however, the figures are increasing to a minimum of 5% of Qualifying Earnings being paid into a pension, with the employer being responsible for at least of 2%.
What do I need to do?
Start thinking now about your financial budgets for next year, and build in provision for the additional employer contributions.
Make your employees aware of the change in their own contribution levels.
If you are planning pay rises, consider the timing of these and whether April is the appropriate time for these too, to help employees manage their income and expenditure at the time when their pension costs rise.
Make sure that you have systems in place to collect the correct contributions through your payroll and to pay the new amounts into your pension scheme.
If you require help to comply with your employer obligations under Auto enrolment, please contact us or call 0808 1644 222 for more information.