From 6th April 2018 the total minimum contribution will increase from 2% to 5% of qualifying earnings, of which at least 2% must be paid by the employer, and then it will increase again to 8% of qualifying earnings from 6 April 2019, of which at least 3% must be paid by the employer. The worker must then make up the difference.
However, according to research conducted by NOW: Pensions, 62% of auto-enrolled workers are unaware of these minimum contribution increases, even though in most cases it will mean a reduction in their net salary as they may have to contribute up to 3% of their qualifying earnings from 6 April 2018 and up to 5% of their qualifying earnings from 6 April 2019.
If 5four are your payroll provider then you can rely on us to automatically increase the percentage amounts, although employers should ensure that they communicate these increases to their auto-enrolled workers sufficiently in advance to enable them to plan their finances, whilst still reinforcing the benefits to them of workplace pension saving.
If you need assistance communicating these changes to your employees or would like any further information on the workplace pension scheme then please do not hesitate to get in touch. You can also read Becci’s latest Payroll Bulletin here which summarises these increases to minimum pension contributions.