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Auto Enrolment Pension Increase

Auto-enrolment pension increase

Under auto enrolment legislation, minimum pension contributions are required to increase over time. The next increase will happen on 6 April 2019 to a total of 8% of qualifying earnings of which 3% must be paid by the employer.

  Minimum Employer contribution Minimum Employee contribution Total minimum contribution
April 6 2018 – April 5 2019 2%   3%   5%  
April 6 2019 onwards 3%   5% 8%  

What does Auto enrolment mean?

Under the Pensions Act 2008, every employer in the UK must put certain staff into a workplace pension scheme and contribute towards it. This is called ‘automatic enrolment’.

Who is eligible for auto enrolment?

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.

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