Increase in auto enrolment pension contributions

On the 6 April 2018 auto-enrolment contributions increased to 2% of earnings for employers and 3% for employees giving a total minimum contribution of 5%. If an employer already pays 5% or more then it may be that the employee will not need to make any contributions, however this will depend on the scheme. It is also possible for both the employer and employee to contribute more than the minimum required by law.

Employers should ensure there software is up to date with the current legislation and calculates the correct pension contributions based on the above changes. If you use the qualifying earnings basis the band is increasing for 2018/19 to £6,032 – £46,350 (annually).

There will be further increases from 6 April 2019 onwards where the total minimum contributions will be 8% and the employer must pay at least 3%.

Alex Dent, Chartered Accountant Carlisle Office
Alex Dent,
Chartered Accountant
Carlisle Office

Increased contributions for workplace pension schemes in 2018

Auto-enrolment of staff in workplace pension schemes now applies to even the smallest of employers, although there are exclusions. The current minimum contributions are 1% from the employer and 1% from the employee but these limits are scheduled to increase to 2% and 3% respectively from 6 April 2018.

The contributions will then increase to 3% from the employer and 5% from the employee from 6 April 2019. Employees will have a further opportunity to opt out of auto-enrolment.

Contact us if you would like further help or advice about auto-enrolment or work place pensions.

Auto enrolment: don’t get caught out by workplace pensions

You’ll have noticed a lot of talk about changes to workplace pensions over the past few years. And you’ll also be aware that ‘auto-enrolment’ – the compulsory provision of a workplace pension for your staff – was on its way.

But what does auto-enrolment mean for you?

The big corporate-sized businesses are already meeting this auto-enrolment requirement, and most smaller UK businesses (yours included) will need to have an auto-enrolment pension scheme up and running in the very near future – your staging date can be found out here by entering your PAYE reference.

So, with time slipping away, now is the time to assess how auto-enrolment will impact on your business.

It’s by no means a simple task – setting up the right systems, admin and payroll software is a big job. And that means acting fast to avoid being caught out by workplace pensions.

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Big changes on the horizon for minimum wages and compulsory pensions

It’s hard enough looking after your business without your employees causing you grief too. There are some big changes coming your way very soon that will impact your wage costs. There are also new regulations relating to pensions that you must comply with from the 1st October this year.

New rates for minimum wages

As you know, the rules relating to the minimum wage change from the 1st October this year. The new rates will be £3.87 per hour for 16 to 17-year-olds, £5.30 per hour for 18 to 20-year-olds and £6.70 per hour for those who are 21 and over.

What is less well known is that the apprentice rate for 16 to 19-year-olds (and over 19’s who are in their first year of training) is now £3.30 per hour. Grants are available towards the cost of their wages, but to be eligible your employee has to be on a suitable course and may require paid leave to attend lectures as part of the grant conditions. All of this has to be factored into your budgeting (which we can help you with.)

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