The Pensions Regulator recently announced that there would be some changes to pension scheme contributions, both for employers and employees. There will be two stages, with the first stage kicking off in April 2018. If your organisation has staff employed on the payroll, you will need to get your skates on to ensure you remain compliant.
Auto Enrolment was introduced in 2010 and came into force from October 2012 as a measure to help ensure that every employee was offered a workplace pension by 2018. Every employer was given a staging date which required them to enrol all staff into a pension scheme by that date and ensure they were paying the minimum amount into the pension scheme.
What has changed?
Employers are still required to offer a pension scheme to employees and they are still required to make pension contributions by law. The minimum amount that employers are required to pay into an Auto Enrolment pension scheme however will shortly be increasing.
This will be phased in over two stages – the first increase must be in place from 6 April 2018 and the second from 6 April 2019.
Increases will vary according to what employers and staff pay into a pension scheme, as it is typically based on earnings. For the 2017/2018 tax year this earnings range is between £5,876 and £45,000 a year, and for 2018-2019 it is expected to be between £6,032 and £46,350 a year.
Most employers use a pension scheme which requires a total contribution of the 2% which is the current minimum level. However, this minimum will increase at set times over the two phases. The Pensions Regulator website states: “contribution increases from the current minimum of a total 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%.”
If these increases are not actioned, then the pension scheme will no longer be classed as qualifying and cannot be used for auto enrolment. If you are unsure as to what your current contributions levels are you will need to check the documents that were sent to you when the scheme was set up.
Phasing applies to all employers with staff enrolled in an Auto Enrolment pension scheme. If you do not have any staff enrolled in a scheme, for example self-employed contractors, or you already pay above the increased minimum amounts, then you do not need to take any further action.
You can download our latest update from the Wilkins Kennedy website at www.wilkinskennedy.com/resource-centre for more information, including assistance in calculating contributions, with variables such as commission, bonuses or overtime. Alternatively you can contact the payroll team at Wilkins Kennedy to discuss how to take matters forward.
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