Minimum pension contribution rates under auto-enrolment increased on 6 April 2018.
The new rates are at least 2% of pensionable salary from the employer and 2.4% from the employee (plus a 0.6% government contribution, so a total of 3% from the employee). This compares to 1% each from the employer and employee before the increase. And that’s not the end of the planned increases – from 06 April 2019, minimum contributions will be going up again, to 3% from the employer and 5% from the employee (4% from salary with a 1% government contribution).
These are the first increases since the introduction of auto-enrolment, and there are no immediate plans for minimum contributions to go up any further after 2019.
What does it mean for business?
While the cost of providing pensions will go up for both businesses and individuals, helping staff to save effectively for their retirement is vital. According to the Department for Work and Pension’s Automatic Enrolment Review in December 2017, 12 million people are under-saving for their retirement.
“Good pensions are also about great communications – making sure staff value the extra money they are putting aside and also getting from their employer ensures that everyone wins.”
Good pensions are also about great communications – making sure staff value the extra money they are putting aside and also getting from their employer ensures that everyone wins. So, as an employer, as well as understanding your responsibilities, you should also make sure your employees are fully informed of the contribution increases to avoid queries and the risk of workers opting out of your scheme.
To help you effectively communicate the positive message to your employees, we have designed a series of generic employee posters, flyers and e-bulletins to enable you to fulfil your responsibilities.
You can find these free downloadable resources and more information at:http://www.brunsdon.co.uk/going-up-resources
If you want to discuss your company pension arrangements – or make sure that your communications about retirement savings are hitting the spot, please talk to your Brunsdon Financial Adviser.
DWP Automatic Enrolment Review
Auto-enrolment contribution rates
Any information regarding tax treatment or legislation is based on our understanding of current UK legislation law, tax law and HM Revenue and Customs practice (May 2018), all of which may be subject to change and your business circumstances may impact on these.
Please note that this information is for guidance only and does not constitute personal advice. Brunsdon is not responsible for the content of external web sites.