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Auto-enrolment pensions minimum contributions set to increase from 6th April 2018!

Auto-enrolment pensions minimum contributions set to increase from 6th April 2018!

Please note that if you have staff the auto-enrolment pensions contribution goes up from 6th April 2018 and again from 6th April 2019.

The new contribution rates will be:

Date Effective Minimum
Employer
Contribution
Staff
Contribution
Total
Contribution
Currently 1% 1% 2%
6th April 2018 2% 3% 5%
6th April 2019 onwards 3% 5% 8%

To remain a qualifying scheme, all automatic enrolment pension schemes with contribution rates that would be below the minimum amount after the rate increases must apply the higher rates.

What does Auto-enrolment mean?

The new law requires every employer to automatically enrol workers into a workplace pension scheme if they:

  • aged at least 22 but under state pension age
  • earn at least £10,000 a year
  • work or normally work in the UK

How do auto-enrolment pensions work?

It is compulsory for employers to automatically enrol their eligible workers into a pension scheme. The employer must also pay money into the scheme.  

If you’re an eligible jobholder, who doesn’t want to join your employer’s workplace pension scheme, you can opt out of the scheme after you have been automatically enrolled.

If you opt out of the scheme within one month of being automatically enrolled, you will be treated as if you had never joined the scheme, and any money that you have paid into the scheme will be refunded in full. You’ll only receive back the payments that you are deemed to have made; you’re not entitled to receive the contributions your employer may have made or any tax relief the Government has paid.

Read further how you could be affected at the Pension Regulator

If you have any questions on this or another accountancy topic then contact AJR & Co Ltd to arrange a free 30 minute consultation

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From AJR & Co Ltd