The Minimum Auto Enrolment Pension Contribution increases come into effect on 6 April 2018
The minimum auto enrolment pension contributions are set to increase on 6 April 2018. Employers will need to take steps now to prepare for the increase towards their employees’ pensions.
The total minimum contributions will increase from 2% to 5% with employers contributing a minimum of 2% and employees contributing the remaining 3%.
Employers can however choose to pay the full 5% in April 2018. In these circumstances employees will not need to make up any shortfall and may not have to pay into the pension at all provided that the total minimum contribution is achieved and also depending on the pension scheme’s rules.
Employers can of course still continue to offer salary sacrifice to fund pension contributions.
It is also important to note that the minimum auto enrolment pension contributions will increase again on 6 April 2019. Please see the table below which details the increases:
Employer Minimum Contribution
|Employee Minimum Contribution||Total Minimum Contribution|
|06/04/2018 to 05/04/2019|
THE NEXT STEPS
- Employers should now inform their employees about the increases in minimum contributions and of course decide if they wish to contribute more.
- Employers should then integrate the increases in the minimum auto enrolment pension contributions into their costings when considering financial budgets for 2018 and beyond.
If you would like any additional information regarding the auto enrolment minimum contribution increases please don't hesitate to contact our Payroll Partner, Graeme Sheridan on the details below:
direct dial: 01942 292506
mobile: 07712 679064