We know that more awareness is needed on how the legal minimum contribution increase will affect business – this podcast will help you understand how the increase will impact you.
We help take some of the weight off you by highlighting the key things you need to consider about the change in law.
In this episode, we talk about how the increase to minimum contributions will affect your business.
Here’s the full podcast in writing – so you can read instead of, or as well as, listening…View transcript
Hello and welcome to this podcast from The People’s Pension.
This is the first of three podcasts to answer your questions about the increase to the minimum contributions for automatic enrolment.
In this one we’ll answer the question “How will the minimum contribution increase affect my business?"
So, let’s get cracking…
The reason you need to know about the increase to the amount you have to pay for automatic enrolment, is because it’s the law.
When automatic enrolment was introduced, the government set the ‘total minimum contribution’ and the minimum employer contribution to be paid into an automatic enrolment pension scheme.
They also set two dates for increasing these minimum contributions.
- The first increase is on 6 April 2018
- and the second is on 6 April 2019.
This means that your business may need to contribute more to your employees’ pensions than you’re doing now.
These podcasts will cover information about the first increase only.
These podcasts focus on the ‘total minimum contribution’ level based on qualifying earnings, which is the legal minimum requirement. If you’ve chosen any other basis for your pension, the minimum contribution levels will then vary.
So, how much extra does your business need to pay?
Well, currently, the legal ‘total minimum contribution’ for automatic enrolment is 2% - 1% of which must come from you, the employer.
From 6 April 2018, this total will increase to 5%. As the employer you must contribute at least 2% of this, with the remaining 3% being made up by employees and tax relief. Your employees will receive tax relief from the government, to help them build a bigger pension pot. We’ve made a handy video to explain how the ‘total minimum contribution’ increase will affect your employees – you can find the link on the podcast homepage.
When it comes to telling your employees about these changes, you’ll find plenty of information to help you in the communications toolkit – you can find the link on the podcast homepage.
There’s also the help and support section on our website to answer general questions, but if you have specific questions about your scheme, please give us a call on 01293 586 666.
Thanks for listening
We hope you found it useful. If you’re wondering how the minimum contribution increase will work in practice, then tune in to our next podcast which is available now.Close transcript
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