Increase to your clients’ automatic enrolment minimum contributions – it’s the law
Has your client checked they’re meeting the higher contributions?
By law, the minimum contributions for automatic enrolment increased on 6 April 2018 and are to go up again on 6 April 2019. Your client needs to make sure they’re remaining compliant and paying the correct contribution amount.
So what does my client need to do?
Action should have been taken before the start of the pay period that includes the 6 April 2018.
If they’ve not done it already, they’ll need to log in to Online Services, where there will be alerts to tell them what they need to do depending on how their account is set up.
Remember – your client has a legal obligation to meet the new minimum contributions. If they don’t, we may report them to The Pensions Regulator, as we have a duty to monitor their contributions.
Some important information and dates
The most recent increase to the legal minimum contributions took place on 6 April 2018, with the next increase taking place on 6 April 2019. It’s important for your client to note the next date to help them plan ahead. Their company payroll will need to be aware so they can make any necessary adjustments, as will their IT department if they have bespoke payroll software.
So what happens next?
Your client by now should have checked and made any necessary changes to their Online Services account. If your client and their employees already pay the new legal minimums, they wouldn’t have had to do anything. And they’ll just need to prepare for the next increase on 6 April 2019…
- From 6 April 2019:
The second increase will take the total minimum contribution from 5% of qualifying earnings to 8% of qualifying earnings (of which employers must contribute at least 3% of qualifying earnings whilst their employees make up the difference of 5%).
Tools to help your client tell employees about the change
Although there are no additional duties under automatic enrolment for employers to tell employees about the increase to contributions, they may wish to do so. This will help minimise queries and reduce the risk of some employees deciding to leave their pension scheme.
And our communications toolkit makes it easier for them to do so…
There, they’ll also find helpful material like:
- Simple wording to put on employee payslips explaining the change
- Posters to raise awareness in their workplace
If you or your client have any questions, it’s worth checking our help and support first, where you’ll find answers to all our most frequent questions.
More support on contribution increases
To help employers communicate the contribution increases to their employees, we’ll be providing template letters for them to use. And we’ll support them with other materials in the coming months, too.
Or for more guidance, download the Increases to minimum contributions guide »
The Pensions Regulator’s website provides more information on contribution increases.