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Auto-enrolment contributions increase

As of 6 April 2018, employees and employers are required to increase the amount of contributions into their automatic enrolment pension.seesaw pig

Currently, until 5th April 2018, the total minimum contribution rates are 2%, with the employee and employer minimum contributions being 1% each.

The contribution levels will continue to rise until the employer is paying a minimum of 3% and the employee a minimum of 5% towards the pension – making the total minimum contribution rate 8% by 6th April 2019.

If the employer pays the same as the total minimum contribution then the employee will not need to pay any contributions, unless the scheme rules require a contribution. Both the employer and employee can choose to contribute greater amounts to the pension if they wish.

If the employer contributes more than their required minimum amount - but less than the total minimum amount - then the employee would need to make up the shortfall between the total minimum and the employer contribution.

The table below demonstrates the phases of contribution increases and the dates they will be effective:

 

Date effective Employer minimum contribution Employee minimum contribution Total minimum contribution

 

6th April 2018 to 5th April 2019

2% 3% 5%

6th April 2019 onwards

3% 5% 8%

 

If you would like any advice or information on any of the areas highlighted above, please get in touch with Jacqueline May, Payroll Manager, or your usual Martin Aitken & Co contact to arrange an appointment.

 

The information contained within this article is for information purposes only and represents our understanding of law and HMRC practice, UK tax rates and The Pension Regulator legislation which can change.

The purpose of this article is to provide technical and general guidance and should not be interpreted as a personal recommendation or advice. It is important to take professional advice before making any decisions relating to your personal or business finances.  

 

 

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