Auto-enrolment – contribution increase

As employers you have a duty under the Pensions Act 2008 to enrol employees, who satisfy the eligibility criteria, into a workplace pension scheme. This is known as ‘auto-enrolment’ and the aim of this government backed scheme is to help employees plan for their retirement.

The eligibility criteria for enrolment may vary from scheme-to-scheme, if you are unsure on your criteria you should check your scheme documentation or speak to your pension provider.

Your duties under the Act do not end at the enrolment stage, you must continue to make employer contributions each time you pay your employees and from 6th April 2019 these contributions will increase.

With effect from 6th April, the minimum contributions that both you and your employees contribute into the auto-enrolment scheme will increase to a total minimum contribution of 8%*. This is made up of a minimum employer contribution of 3%* and a minimum employee contribution of 5%*. You may choose to base the percentages on your employees qualifying earnings, these will also increase in April 2019, the lower earnings limit will increase to £6,136* and the upper earrings limit will increase to £50,000*. You may have other options available to you depending on your scheme or provider.

*Please note that the amounts and percentages are based upon amounts defined in the 2019-2020 tax year.

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