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Increase of automatic enrolment workplace pension scheme contributions

The minimum contributions that you and your staff pay into your automatic enrolment workplace pension scheme are increasing.

It is your responsibility as an employer to make sure these increases are implemented.

When do the increases take effect?

Minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019.

Who does this apply to?

All employers with staff in a pension scheme under the automatic enrolment rules must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.

What are the increases?

The amount you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme. You can find this information in the scheme documents sent to you when you set up the pension scheme or you can speak to your pension provider.

This table shows the minimum contributions you must pay and the dates when they must increase:

Date

Employer minimum contribution

Staff contribution

Total minimum contribution

Until 5 April 2018

1%

1%

2%

6 April 2018 to 5 April 2019

2%

3%

5%

6 April 2019 onwards

3%

5%

8%

 

What to do next?

As of 6 April 2018, the increased level of minimum contributions will be automatically applied to you as the employer and any employee in a scheme.

You should let your staff know about the increases. This could be by letter, email or any other form but should be communicated.

Depending on what you have agreed with your pension scheme provider, they may also write to your staff or have letters that you can use. Please do not assume that this will be the case and you should ensure that these canges are communicated to your staff.

An example letter can be found on the pensions regulator website at:

http://www.thepensionregulator.gov.uk/en/employers/phasing-what-do-i-need-to-do-to-set-up-these-increase.aspx

The increase in contributions may result in some staff members deciding they no longer wish to contribute. If this is the case they will need to contact the scheme provider and opt out of the scheme. They should have had details on how to do this sent to them when they were initially enrolled into the scheme.

If you have any questions or need any further advice please give us a call on 01923 776818.

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