The minimum workplace pension contribution levels are increasing again on 6 April 2019.
This planned increase is the next step in ‘phasing’ of contributions. Employers should note that it is their responsibility to implement the required change by the deadline.
Who does the increase apply to?
All employers with staff in an eligible pension scheme must take action. They must make sure at least the minimum contribution amounts are being paid. This applies to employers whether a pension scheme was set up for the purpose of automatic enrolment or an existing, eligible scheme was used.
The new minimum level will apply to both employer and employee contributions (or the total contributions, provided the employer pays at least the minimum).
The increases do not apply to employers who are using a defined benefits pension scheme.
What are the increases?
This table below shows the minimum contributions you must pay and the date when they must increase:
The above table assumes Qualifying Earnings. These include salary, wages, overtime, bonuses and commission, statutory sick pay, any statutory pay received during paternity, maternity or any other kind of family leave.
Calculating the contributions
The amount paid into the pension scheme by you and your staff will vary, depending on the type of scheme and the rules of that scheme.
From April 2019 most employers will need a total minimum contribution of 8%, based on a qualifying earnings. The range of qualifying earnings is between £6,032 and £46,350 a year.
Some Employers calculate contributions using different elements of staff pay e.g. basic earnings. Use the tables available on The Pension Regulator website to work out which minimum contribution increases apply to you.
Make sure your payroll provider is on board
It is your responsibility as the employer to make sure the changes happen. Communicate with your payroll provider to confirm the correct contribution deductions are set up for the 6 April 2019 deadline.
Tell your staff about the increases
You should let your staff know that there is an increase to their pension contributions. Visit The Pension Regulator website for advice on doing this and to download a sample letter template.
If you would like to discuss workplace pensions, please contact us.