The minimum contributions you and your staff pay into your automatic enrolment workplace pension scheme will increase from 6th April 2019. If you employ people then you probably have an auto-enrolment scheme in place and it is your responsibility to make sure these increases are implemented. 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 you don’t need to take any further action.
What are the rates?
The minimum contributions you must pay at the moment are 5% of pensionable income for the employee must be contributed in total and at least 2% needs to be contributed by the employer.
From 6th April 2019, 8% of pensionable income must be contributed in total and at least 3% needs to be contributed by the employer.
If you decide as an employer pay to contribute the whole 8% minimum contribution required, your staff won’t need to pay anything.
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.
What is pensionable income?
The calculation for pensionable income is based on a specific range of income. For the 2018/19 tax year this range is between £6,032 and £46,350 a year (£503 and £3,863 a month). These figures are changed each year by the government.
Income is made up by salary, wages, commission, overtime, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay and statutory adoption pay. So if you pay a Christmas bonus or a few hours of overtime, the pension contribution needs to increase accordingly.