Increase in minimum pension contributions

pension contributions

On 6th April 2018, the legal minimum contributions that an employer needs to pay into their staff’s qualifying pension is increasing from 1% to 2%. At the same time, the total minimum contribution rate goes up from 2% to 5%. Employers will need to increase their contributions (unless they are already contributing above the new legal minimum of 2%) – and staff contributions may also need to increase to make up any amount needed to meet or exceed the combined legal minimum total of 5%.

Contribution levels will rise again on 6th April 2019 and employers will the need to pay a minimum of 3% towards the pension, while the total minimum contribution will reach 8% – so staff may be paying the 5% difference.

Data effective Employer minimum contribution Total minimum contribution
Until 5 April 2018 1% 2%
6 April 2018 to 5 April 2019 2% 5%
6 April 2019 onwards 3% 8%

 

The table above shows the minimum contributions for employers who are using a defined contribution scheme for auto enrolment and the date when these legal minimum rates apply.

Our payroll team will make sure that you use the correct percentage.

Contact us for advice at hello@garbutt-elliott.co.uk – 01904 464 100.