Auto Enrolment Contributions are Increasing Again

The minimum amounts that must be contributed to employee’s pension schemes under Auto Enrolment (AE) are increasing from 6 April 2019.  The relevant rates are as detailed below:

Date Effective

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 the total minimum contribution rate must be made, with the employer paying at least 3%.   If you as an employer pay the total combined minimum contribution required, your employees will not need to contribute towards the scheme. Both parties can choose to pay more than the minimum required contributions if they wish to do so.

Failure to comply with AE legal duties could see businesses face thousands of pounds in fines.

Contributions for most schemes are calculated as a percentage of an employee’s “Qualifying Earnings.”  From 6 April 2019 Qualifying Earnings will be employment income between £6,136 and £50,000 for the year. More information about this type of pension scheme can be found here

If you have agreed to calculate your minimum contributions with your pension provider in a different way, then you’ll need to apply different increases.

More information can be found here.

We recommend that you notify your employees of the upcoming rate changes prior to 6 April.

If you have any queries about these increases please contact our payroll team at: payroll@mitchellsaccountants.co.uk or call us on 01246 274121 (Option 1)