With the new tax year on the horizon, we’re faced with a raft of changes. One of the most pressing is the impending increase to the Auto Enrolment minimum contributions.
- For those of you on PAYE (and opted in), you’ll see this on your payslip from April.
- If you’re an employer, you have the task of learning and implementing the steps required to your payroll and pension scheme up to scratch for the April 2019 pay run.
The minimum contributions employers and employees pay into their automatic enrolment workplace pension scheme will increase from 6 April 2019. It’s necessary for all employers with staff in a pension scheme for automatic enrolment to take action. You must ensure that the new minimum amounts are being paid in. This applies to you whether you set up a pension scheme for automatic enrolment, or if you decided to use an existing scheme.
However, you won’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you’re already paying above the increased minimum amounts.
What are the increases?
The new minimum contributions are outlined in the table below:
|Date||Employer minimum contribution||Staff contribution||Total minimum contribution|
|New rate: 6 April 2019 onwards||3%||5%||8%|
|Current rate: 6 April 2018 to 5 April 2019||2%||3%||5%|
By law, a total minimum amount of contributions must be paid into the scheme. Employers will make at least the minimum contribution towards this amount, leaving staff to make up the difference.
Alternatively, the employer can decide to cover the total minimum contribution, meaning staff won’t need to pay anything.
So, what do you need to do?
As an employer, you need to:
- Work out which increase applies to you;
- Work out which employees or staff members this applies to;
- Write to your staff to let them know about the changes (your pension provider might do this, or have templates available for you);
- Make sure you’re ready to apply the increase.
Finally, you must check with your accountant/payroll bureau to make sure they have updated your payroll records. If you’re running your own payroll, ensure the software can calculate the correct increase and contribution levels.
Don’t get caught out – Ten Forward can help!
If you’re a new employer or considering changing your pension provider, we recommend you seek advice from a regulated financial advisor to discuss which provider is right for you.
If you need assistance running your payroll, get in touch today – our friendly team of experts are ready to help!