Auto-Enrolment for Pensions – Increases in Contribution Levels
As you may be aware, 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.
The workplace pensions regulations did however include further phased increases in the minimum contribution levels.
The first of those increases is to 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|
|Currently until 5 April 2018||1%||1%||2%|
|6 April 2018 to 5 April 2019||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?
- The good news for clients using our Baldwins Payestaff service is that we will be ensuring 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 advance notice of these increases in contribution levels. To assist you with that, we have created a draft template for you 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 are using, you will need to ensure that the appropriate changes are made to effect the increases in contributions 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 the outsourcing of your payroll. There are many advantages to having your payroll processed by a professional payroll bureau, not least that you will not 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 Baldwins Payestaff.
Should you require more information on Automatic Enrolment and the increases in contribution level please email firstname.lastname@example.org.