Minimum Pension Contribution due to rise again

The minimum contributions you and your staff pay into your automatic enrolment workplace pension scheme will increase from 06 April 2019. This is also sometimes known as phasing. It is your responsibility to make sure these increases are implemented.

Who does this apply to?

All employers with staff in a pension scheme for automatic enrolment must take action to make sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.

However, you don’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you are already paying above the increased minimum amounts.

If you’re using a defined benefits pension scheme the increases do not apply.

What are the increases?

This table below shows the minimum contributions you must pay and the date when they must increase:

Date Employer minimum contribution Staff contribution Total minimum contribution
New rate: 6 April 2019 onwards       3%      5%      8%
Current rate: 6 April 2018 to 5 April 2019       2%      3%      5%

 

By law a total minimum amount of contributions must be paid into the scheme. You, the employer, must make at least the minimum employer contribution towards this amount. and your staff member must make up the difference.

If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.

The amount you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme. Your staff contribution may also vary depending on the type of tax relief applied by your scheme. You can find this information in the scheme documents sent to you when you set up the pension scheme or you can speak to your pension provider.

Most employers use pension schemes that from April 2019 will require a total minimum of 8% contribution to be paid. The calculation for this type of scheme is based on a specific range of earnings. For the 2018/19 tax year this range is between £6,032 and £46,350 a year (£503 and £3,863 a month, or £116 and £892 a week). These figures are reviewed each year by the government.

When you are calculating contributions for this type of scheme you include the following:

  • Salary
  • Wages
  • commission
  • bonuses
  • overtime
  • statutory sick pay
  • statutory maternity pay
  • ordinary or additional statutory paternity pay
  • statutory adoption pay

 

Posted by Cassey Nixon on

3rd December 2018

Categories

  • Reporting Employee Changes

    There are rules that businesses must follow when they are reporting employee changes. These changes must be sent to HMRC using a Full Payment Submission (FPS). The FPS is a submission that you need to make to HMRC every time you pay your employees and must be submitted on or before the usual date you […]

    Andrea L Richards | Accounts Navigator Associates
  • Planning A Christmas Party?

    Now is the time that many businesses are planning their Christmas celebration for their staff, clients and prospective clients. The cost of a staff party or other annual entertainment is generally allowed as a deduction for tax purposes. If you meet the criteria written below, then there is no need to report anything to HMRC […]

    Andrea L Richards | Accounts Navigator Associates Limited