21 Feb Workplace Pension Increase in Contributions
Increase in workplace pension Contributions
Since October 2012 9.5 million workers have enrolled work place pensions. Individuals saved an extra £6.9bn into workplace pensions in 2017-18 as a result of auto-enrolment and opt-out rates are still believed to be below 10%.
In April 2019, along with the minimum wage increases, there will be an increase in the contribution percentage for both employees and employers. The rates can be found below.
|Date effective||Employer minimum contribution||Employee minimum contribution||Total minimum contribution|
|Until April 2018||1%||1%||2%|
|Between 6th April 2018 to 5th April 2019||2%||3%||5%|
|6th April 2019 onwards||3%||5%||8%|
The calculation for this type of scheme is based on a specific range of earnings.Most employers use pension schemes that will require a total minimum of 8% contribution to be paid from April 2019.
For the 2019/20 tax year this range is between £6,136 and £50,000 a year. These figures are reviewed each year by the government.
What do you need to do?
You will need to work out which members of staff this increase applies to and then let them know about the increase. Click here to download a template letter to send to the relevant members of staff.
You will also need to ensure your payroll function manages the increases correctly.
If you want to check contributions visit the Pension Regulator calculator. It will tell you contributions for both employee and employer, annually or monthly.
For many businesses it will soon be time to re-enrol staff on to the work place pension scheme. Every three years employers will have to re-enrol all the eligible staff.
We will cover this in greater depth in another blog post later in the month.
If you would like to find out more about setting up a work place pension and outsourced payroll please give us a call on 01379 646943 or visit the EA Assist website here.