Pensions - Articles - Are you ready for Auto Enrolment minimum payment increase

On 6 April 2019, minimum contributions under the automatic enrolment requirements are increasing from 5% to 8%. Auto-enrolment is not just about paying the right level of contributions, employers need to communicate any changes to employees and ensure the pension scheme is still fit for purpose. Failure to do so could result in fines and negative publicity.

 By Ken Anderson, Head of DC Solutions at XPS Pensions Group

 The increase in contribution rates may mean that the cost of employing staff will rise. Businesses may wish to meet the increased costs by providing salary growth in the form of pension contributions or spread current pension spending more thinly. Conversely, employers may choose to offer all employees access to good quality pension provision.

 Whichever approach employers take, employers should check whether savings in national insurance contributions (NICs) can be made on both their and their employees’ contributions. Understanding the implications of different approaches from a cost and risk perspective is important to ensure businesses meet their corporate goals.

 By law, employers are currently required to pay minimum contributions of at least 2% of qualifying earnings into employees’ workplace pension scheme. Following the rise of minimum contribution levels on 6 April 2019, employers will have to pay a minimum of 3% towards their employees’ pension. Employees will need to pay any shortfall, with the total minimum contribution reaching 8%.

 Depending on what employers have told their employees so far, employers may have to consult with them about the increase in minimum contribution rates.

 If employers offer salary sacrifice or flexible benefit arrangements, or have adopted a ‘contractual enrolment’ approach, they may need to consult with employees to vary the contractual agreement they have with their employees.

 For further information please click here:

Back to Index

Similar News to this Story

Saga comment on the Royal Mail CDC pension scheme
Following Work and Pensions Secretary, Amber Rudd, welcoming plans for the Collective Defined Contribution (CDC) pension scheme to be introduced in th
CPI 12 month rate increases but still lower than BOE target
Following the publication of the Consumer Prices Index (CPI) 12-month rate for February, please see the below comment from Kate Smith, Head of Pension
The pensions quiz reveals if you are prepared for retirement
Back in 2016, pensions advice specialist, Portafina, set out to find what the nation knew about their pensions. Now, three years on, Portafina asked a

Site Search

Exact   Any  

Latest Actuarial Jobs

Actuarial Login

 Jobseeker    Client
Reminder Logon

APA Sponsors

Actuarial Jobs & News Feeds

Jobs RSS News RSS


Be the first to contribute to our definitive actuarial reference forum. Built by actuaries for actuaries.