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Auto enrolment contributions

If you have an auto enrolment pension scheme, there are some changes coming. This means a higher ongoing cost burden for employing people.

From 6 April 2019, the minimum percentage of salary that you must contribute to eligible employees’ auto enrolment pensions is increasing to 3%. The overall contributions rise to 8% of salary each month. For staff, their minimum contributions are rising to 5%, depending on the amount you decide to put in.

As the employer it is your responsibility to ensure that these increases are implemented. You’ll need to assess which employees are affected and make the necessary adjustments to your payroll. Then you need to communicate the changes to your staff. The Pensions Regulator does have the power to issue fines for non-compliance.

Please note that, depending on your pension scheme rules, there may be a provision for your employees to avoid their contribution rises. It is known as opting down. You can refuse an opt down request, but if you permit it, your employee would have to go through the auto enrolment process again as required.

It’s important to flag that you are not allowed to actively promote opting down. It goes against the intention of the legislation and can have knock-on effects that disadvantage your staff. So make sure you are aware of the upcoming changes.

Remember you don’t need to take any further action if you don’t have any staff in a pension scheme for automatic enrolment, or if you are already paying above the increased minimum amounts.

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