Pension contribution rates are due to increase from April 2019.
This will affect both employee and employer.
These legislative changes, were established in two phases, the first of which introduced an increase in the minimum required contributions from April 2018, and the second phase will introduce a further increase in April 2019.
The following figures provide an example of what the new minimum contributions will be which you MUST use as part of your employer auto enrolment duties:
|Critical Dates||Employer minimum contribution¹||Employee minimum contribution²||Total minimum contribution|
|6 April 2018 - 5 April 2019||2%||3%||5%|
|From 6 April 2019||3%||5%||8%|
- The table assumes the employer is paying only the employer minimum contribution. An employer can agree to pay more, but can’t pay less than this.
- The employee only needs to pay any difference between the employer contribution and the total minimum.
What if I want to contribute more than the minimum?
These rates are the minimum you must contribute, however, either the employee or employer can choose to contribute a higher rate. Please contact us if you or your employee would like to increase their minimum contributions.
What if my employees do not want to make an increase in contributions?
As an employer you have the option to allow your employees to contribute below the new minimum contributions. However, if they decide to take this option they will miss out on the employer pension contribution. This has to be the employee’s decision and they must provide confirmation of this decision in writing. Should an employee wish to do this, you can either freeze your employer contributions at the current minimum rates or you can choose to stop contributing as an employer all together.
As part of our payroll service we provide to clients, these new rates will be automatically applied from 6th April 2019. This will ensure your auto enrolment duties are compliant with the new legislation. If you would like us to provide a full payroll and pensions service for you or have any questions about auto enrolment, please contact us for further information.