Pension Contributions Rise from 6 April 2019
The minimum levels of pension contributions that must be paid into a workplace pension scheme are increasing, for both the employee and the employer.
Who does this effect?
Qualifying earnings are those between £6,136 and £50,000 per annum (2019/2020 tax year).
As an employer, you must make sure at least the minimum employer contributions are paid, and this applies to all pension schemes set up for automatic enrolment and existing schemes.
|Date||Employee Contributes||Employer Contributes||Total|
|From April 2018||3%||2%||5%|
|From April 2019||5%||3%||8%|
No action will be required where employees are currently paying more than the required total minimum contributions.
What do I do if I am using a pension scheme with different minimum contributions?
If it has been agreed that your workplace pension scheme bases its minimum contributions on differing elements of staff pay such as gross pay, for example, there will be different increases.
In this case, you will need to check with your pension scheme provider.
What do employers need to do next?
Employers need to make sure these automatic changes will be implemented in time. Check everything is in place to process the increases whether you are either using a payroll provider, payroll bureau or HMRC payroll tools.
If you pay your staff yourself using payroll software, then you must make sure it is set up to process the increases.
Inform Your Employees
You should let your employees know of the changes by writing to them. Depending on your pension provider, they may also write to your employees or have templates you can use.