The final phase of increases affecting Automatic Enrolment Pension Schemes are due from 6th April 2019. The minimum contribution payable as a total between the employer and employee will rise from 5% to 8% of earnings* with the employer having to contribute at least 3% towards this. As such, if the employer pays 3% the employee will pay 5%. This is likely to be the default position, unless you made other arrangements when the scheme was set-up. It is worth checking with your pension provider/advisor to confirm what is in place for your automatic enrolment pension scheme if you are unsure.
*Pension contributions are usually based on qualifying earnings or pensionable earnings, depending upon how your pension scheme was set-up.
‘It is important that business owners factor in these pension contribution increases when setting their budgets for the new tax year. Under the default minimum position, businesses will see their contributions rise from 2% to 3% and employees will see their pension contributions increase from 3% to 5%. It is therefore advisable to remind employees of these increases, as they will impact net pay.
Businesses should also review their payroll systems to ensure that they can meet their ongoing auto enrolment duties. In addition to the monthly assessments, payment of contributions, compliance letters and record keeping, business owners should also be aware that they may soon be approaching the three-year anniversary of their auto enrolment staging date so they have a legal duty to carry out re-enrolment for their staff. Re-enrolment means that every three-years you must put certain staff back into a pension scheme (where applicable) and complete a re-declaration of compliance to The Pension Regulator.
Visionary Accountants offer payroll and pension services to many small and medium sized companies in St Albans and across Hertfordshire, London and the South East. Contact us on 01727 730550 to discuss how we can offer a cost-effective package to meet your business needs. We offer a FREE initial consultation.’