Auto Enrolment Pension Contribution Uplift

Mar, 2018

As you may be aware, in 2014 the Government introduced legislation to help people save for their retirement.  This requires all employers to automatically enrol eligible employees into a qualifying workplace pension scheme and both the company and employees make contributions to the scheme.

April 2018 sees the first of two planned minimum contribution hikes which are detailed in the table below.

DateEmployer minimum contributionsTotal minimum contributions
Before April 5 20181%2% (including 1% staff contribution)
April 6 2018 – April 5 20192%5% (including 3% staff contribution)
April 6 2019 onward3%8% (including 5% staff contribution)

What will the Auto Enrolment pension contributions be from April 2018?

In line with legislation, the minimum contribution for a qualifying workplace pension scheme from April 2018 is 5%. This comprises 2% from employer and 3% from the employee.

How will this affect me?

If the employee currently pays less than 3% into the pension scheme, their contribution will automatically increase to 3% in April 2018 and in turn, the Company’s contribution will also need to reflect the minimum contribution of 2%.

If the employee currently pays 3% or more into the scheme and the employer 2%, the contributions will not change (although you can alter the amount you pay if you want to)

Will Auto Enrolment pension contributions increase again in future?

Yes, the legislation will require further changes in April 2019 and the minimum contribution levels will increase again.  Further information will be provided in advance.

You should allow plenty of time to put in place these increases.

  1. Work out which increases apply to you.
    • If you are unsure you should check your scheme documents or speak to your pension scheme provider.
  2. Work out which staff it applies to.
    • You need to make the increases in contributions for ALL staff who you had to put into a pension scheme and which you pay into, including any new staff you put into this scheme. The increases do not apply to staff who asked to be put into a scheme that you don’t have to pay into.
  3. Make sure the way you calculate contributions and pay them to the pension scheme is ready to apply these increases from 6 April 2018.
    • With Qtac as your payroll provider everything is in place to process the increases. See below:

To automatically uplift the contributions you will need to be part way through the migration if you click here this will walk you through the migration process.

During the migration you will be greeted by this screen.

There are 3 options that you can select ‘do nothing’, ‘increase to 5% minimum ‘or ‘increase to 8% minimum’ . Once you have selected the option click ‘Next’ to continue

Complete the migration process ready for the start of the new tax year. Remember to review all your pension contributions are correct from the start of the tax year as the pensions schemes with contributions outside the default settings will need manual adjustment.

You should start this process early, as this may take some time.

Telling your staff about the increases

You should let your staff know about the increases.

Depending on what you have agreed with your pension scheme provider, they may also write to your staff or have letters that you can use.