Millions of UK employees automatically enrolled onto a workplace pension scheme will see their minimum contributions rise from 6th April 2019 – and employers will be affected too.
From that date, the minimum amount required to be paid into an employee’s workplace pension scheme is 8% to the value of their qualifying earnings.
For the 2018/19 financial year, employers were required to make minimum monthly pension contributions of 2%, but this will rise to 3% in 2019/20.
Employees will be required to make up the remaining 5% monthly contribution to meet the minimum 8% figure.
As of January 2019, The Pensions Regulator (TPR) revealed that more than 1.4 million (1,448,774) UK employers have completed their auto-enrolment pensions obligations.
Over 10 million employees across Britain are now said to be planning for the future by paying into an auto-enrolment workplace pension.
Lesley Titcomb, Chief Executive Officer, The Pensions Rregulator, said: “We have worked with employers of all sizes to ensure automatic enrolment is a success and we are delighted that 10 million people are newly saving or saving towards their retirement.
“The vast majority of employers continue to support automatic enrolment.
“They’ve played a vital role in creating a savings culture by enrolling [employees] so that they can now expect a pension as part and parcel of their employment.”
Which employees qualify for an auto-enrolment workplace pension scheme?
All employees aged over 22, under the state pension age, and earning over £10,000 per year – or £833 per month or £192 per week – must legally be enrolled in a workplace pension.
When looking at a typical employee earning £27,000 per annum, their employer’s minimum annual auto-enrolment contributions will rise from £419 in 2018/19 to £629 in 2019/20. This is based on pensionable pay above £6,032.
It is vitally important that all small business owners take note of their increasing auto enrolment pension contributions and plan ahead.
It is a good idea to inform your company payroll, if you have one, so that they can make the necessary adjustments to your employees’ payslips.
Employers that don’t meet the new minimum auto enrolment pension contributions from 6th April 2019 are liable for prosecution. It is a legal obligation and should not be taken lightly.
What is Re-enrolment?
Many small employers had a ‘staging date’ of between 1st January 2016 and 1st April 2017. A staging date is when your automatic enrolment duties started.
As part of the regulations, employers must put certain staff back into the workplace pension scheme. This is called ‘re-enrolment’.
Whether they have staff to re-enrol or not, all employers must complete a re-declaration of compliance to tell The Pensions Regulator they have met their duties.
Re-enrolment must be carried out approximately three years after the staging date, consequently many small business owners may be re-enrolling now.
It is your legal duty as the employer to make sure that the re-declaration is completed on time and the information entered is correct. If not, you may be fined.
How we can help
At TaxAssist Accountants we can help you to meet your auto enrolment responsibilities as an employer of which there are many. This will leave you to focus on running your business and relaxed that TaxAssist Accountants have this all in hand.
For a free initial consultation, please call us today on 0800 0523 555 or drop us a line via our online enquiry form.
By Jo Nockels FCCA
Last updated April 2019
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.