Auto Enrolment Contribution Increase from April 2019
By law, on 6 April 2019, all employers are required to increase their contributions into their staff's automatic enrolment pension to at least of 3%. Staff contributions will also increase so that their contributions make up the shortfall needed to bring the total minimum contribution up to 8%.
Tell staff about the changes
While there is not a legal duty to tell staff about the increase, we encourage employers to have information they need about their staff’s workplace pension and how it is changing. We automatically provide a letter for our client's employees.
It’s the law
Automatic enrolment is creating a new savings culture and the increase in contributions is an important part of the policy to boost retirement outcomes.
The Pensions Regulator know most employers want to do the right thing for their staff, however they will take action if an employer is not meeting their responsibilities. Failing to make and maintain the correct pensions contributions could result in a fine or court action.
Three things for employers to check:
Will their payroll deduct the increases? While many payroll providers may automate their software so contributions are increased automatically, employers should check if their payroll software will do this. Their payroll should be ready to deduct the increased contributions when they rise, otherwise the right contributions might not be paid across to the scheme at the right time.
Is their pension scheme making the changes needed to support the increases? Employers should also check their pension scheme is making necessary changes to support the increases and ensure they are continuing to use a qualifying scheme and the right amount of pension contributions are deducted. If an employer’s chosen pension scheme doesn’t support the increases, then they will need to talk to them about their options.
What are they currently contributing? They may not need to take action Employers and their staff can also choose to pay in more than the minimum contributions if they want to and employers who are already paying above the increased total minimum amounts need not take any further action.
Our software automatically keeps up with any changes to the Automatic Enrolment Rares and ensures that our clients are fully compliant, so they don’t need to worry.