Increased contributions for workplace pensions in 2018
Auto-enrolment of staff in workplace pension schemes now applies to even the smallest of employers, although there are exclusions. The current minimum contributions are 1% from the employer and 1% from the employee but these limits are scheduled to increase to 2% and 3% respectively from 6 April 2018.
The contributions will then increase to 3% from the employer and 5% from the employee from 6 April 2019. Employees will have a further opportunity to opt out of auto-enrolment. These increases should be considered when assessing the future impact on your business.
If the employer pays the same as the minimum total contribution then the member of staff will not need to pay any contributions, unless the scheme rules require a contribution.
Both the employer and staff member can choose to contribute greater amounts to the pension if they wish.
The table below demonstrates the phases of contribution increases. These apply to the basic pension set up of banded earnings – if you are using another method (and the therefore certification) the rates may differ slightly:
|Date Effective:||Employer minumum contribution||Staff contribution||Total minimum contribution|
|Currently until 5 April 2018||1%||1%||2%|
|6 April 2018 to 5 April 2019||2%||3%||5%|
|6 April 2019 onwards||3%||5%||8%|