By law, under automatic enrolment, minimum pension contributions are required to increase over time on set dates.
- Increases from the current total minimum contribution of 2% of “qualifying earnings” take place on 6 April 2018, rising to 5%, and on 6 April 2019, reaching a total minimum amount of 8%
- You can choose to pay more than the minimum contributions if you wish
- You can decide to pay the total minimum contribution, which may mean your staff don’t have to make up any shortfall, and may not have to pay into the pension at all, depending on the scheme’s rules
- To remain a qualifying scheme after the rate increases you must apply the higher rates
Both you and your staff can choose to contribute more than the minimum amounts to the pension if they want to.
If you pay in more than the legal minimum, but less than the total minimum contribution shown in the table below, then your staff will need to pay in at least enough to make up the shortfall between these amounts.
|Date effective||Employer minimum contribution||Staff contribution||Total minimum contribution|
|Currently until 5 April 2018||1%||1%||2%|
|6 April 2018 to 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|
NB: If your clients already have workplace pension schemes in place which they have self-certified for use with automatic enrolment, they will have different minimum contribution increases to those set out above – depending on the type of scheme. If this applies you should call to check the percentage concerned. Contact Sue Stephens.