On 6 April, by law, the minimum amount employers have to pay into a workplace pensions goes up to 2% of qualifiying earnings, whilst staff will now contribute 3% – making a combined total minimum contribution of 5%.
Automatic enrolment has so far out more than nine million workers into workplace pension schemes.
All of these people are now on the road to saving for a better retirement, but it’s only the start.
Now that they’re saving for their future, the next step in automatic enrolment is for the amount of staff pay into their pensions to increase, helping them to gradually adjust to saving money for their pension pot. Employers pay more in too, growing it even further. In fact, if they want to, employers can contribute more than the minimum amount they’re required to, meaning staff don’t need to pay in quite so much – as long as the total contribution is still at least 5%.
Please do contact us as A J Bennewith & Co if you have any queries, or would like us to take over your payroll for you.
It is recommended that all employers write to their staff to let them know about the increase in contribution, and you can find letter templates at the following address: http://www.thepensionsregulator.gov.uk/doc-library/automatic-enrolment-letter-templates.aspx?ed2f26df2d9c416fbddddd2330a778c6=kxijvkxsj-kxlxrribl
Minimum contributions will increase again on 6 April 2019, to 3% for the employer and 5% for staff, making a combined total minimum amount of 8% of qualifying earnings. Rates will then stay at this level, unless the government makes changes to automatic enrolment in the future.
This information was taken from The Pensions Regulator and you can find out more on their website: http://www.thepensionsregulator.gov.uk/en/employers
You can also possibly reduce the amount of income tax you pay by making Voluntary Contributions to a pension. Please contact us at email@example.com if you would like more information.