We are now just a few weeks from the first hike in the “minimum” contribution requirements for auto-enrolment compliance.
In practical terms, after 6 April, for employers currently applying those statutory minimums this means that your employees will see an increase in their pension contributions from one per cent of their annual earnings between £6,032 and £46,350 (based on the 2018 figures) to three per cent.
Obviously, this could come as something of a shock for employees who didn’t read the fine print on their auto-enrolment announcements as it will mean less money in their April pay packet (although more will be going into their pension savings).
There’ll also be an increase in the amount you have to pay in as an employer from one per cent of those banded earnings to two per cent.
Again, in practical terms, where staff are affected by this change in contributions it might be sensible to highlight this before the changes take effect noting that this is a statutory requirement. There will also be a similar issue in April 2019, when three per cent for employees and two per cent for employers become five per cent and three per cent respectively. Put it in your diarise and plan for the increased costs as early as possible!
Notify your staff to avoid pay related queries. The Pensions Regulator has the ability to fine employers who don’t meet their auto-enrolment obligations and has recently announced a mix of fines and backdated contributions accruing to a bus company in excess of £32,000. Given that the employer only had 35 staff it shows that it pays to be compliant with these legal obligations and size does not matter!