Calling Employers and Employees!
Important pensions news
Employers and employees – from 6 April 2019, the minimum contributions you make into automatic enrolment workplace pension schemes is on the up.
This matters if ...
You’re an employer with staff in a pension scheme who pays less than the next year’s new minimum’s into your staff’s schemes. If you’re using a ‘defined benefits’ pension scheme, the increases don’t apply.
Here are the current and the new minimum contributions –
The current situation is as follows –
A total minimum contribution must be paid into the scheme – currently 5%. As an employer, you must pay in at least 2%. Whether the remaining 3% is paid by you, by the employee or by a combination of the two, is immaterial. All that matters is that the current total of 5% is paid.
You can see from the table how these figures will change from April 2019.
The figures in the above table apply to almost all pension schemes. The calculation for this type of scheme is based on a specific range of earnings. For the 2018/19 tax year, this range is between £6,032 and £46,350 a year. Each year, the government reviews these figures.
As an employer, when you’re calculating these contributions, you must include all of the following –
It’s possible that, as an employer, you may have agreed with your pension scheme to base minimum contributions on different elements of staff pay. In this case, the increases you apply will need to be different. You can find out the details on the Pensions Regulator website.
As an employer, it’s your duty to explain thee changes to your staff. You’ll find a letter template here. You should let your staff know about the increases. Here’s an example letter template for you to use.
It’s the law
If you’re the employer, it’s your legal duty to make sure the right minimum contributions are being paid from 6 April 2019. If you fail to do this, you could receive a heavy penalty. So – our advice is … don’t take risks. If you’re in any doubt at all as to what you should be doing to prepare for next year’s auto-enrolment increases, let us know. We’re the payroll specialists.
This legal information is not the same as legal advice and you may not rely on our post as a recommendation of any particular legal understanding. Please, consult an attorney if you’d like to get advice on your interpretation of this article.