By law, the total minimum contributions your organisation must pay into its staff workplace pension schemes increase on 6 April 2019. You need to be ready for this increase, and make sure you’re set up to pay the correct amounts into staff pension schemes – so you comply with the law, and your staff receive the pension payments they’re entitled to.
From 6 April, the total minimum contribution including employer and employee payments must be no less than 8% of qualifying earnings. Your organisation must pay a minimum of 3%, with staff making up the rest of the 8%.
Your organisation can choose to pay more than its 3% minimum contribution if it wishes. If so, staff won’t need to pay in as much to meet the total minimum contribution of 8% of qualifying earnings.
|Date effective||Total minimum contribution||Employer minimum contribution Staff contribute the remainder||Staff contribute the reminder|
|Current rates||5%||2%||Up to 3%|
|6 April 2019||8%||3%||Up to 5%|
You should be ready to calculate contributions using the new rates the first time you run payroll from 6 April.
Your organisation may have agreed with its scheme provider to calculate minimum contributions in a different way. This is called certification, and details of what they need to do can be found The Pension Regulator website
- it should be simple for the new rates to be applied, but you should prepare now by speaking with your payroll team and software service providers, to make sure your systems are ready
- The Pensions Regulator recommends that you write to staff to let them know about the increase in contributions – letter templates are available on our website, including in other languages for staff who may not speak English
Please note, if your organisation already contributes more than the total minimum of 8% into staff workplace pension schemes, or it uses a defined benefit (DB) scheme for automatic enrolment, it doesn’t need to take any action. And if any staff asked to be put into a scheme that your organisation doesn’t pay into, the increases don’t apply to them.
Get in touch with us for Auto-Enrolment help and general payroll support – contact Sue Stephens