Are you ready for pension contribution changes?

Money jar with pension label

Are you ready for pension contribution changes?

Back in 2012, auto enrolment was introduced by The Pensions Regulator (TPR). It seems like a long time ago now, but pension contributions will be changing from April 2019.

From the 6 April, under auto enrolment legislation the minimum contributions are required to increase to a total of 8% of qualifying earnings - 3% of which must be paid by the employer, and the employee having to contribute 5%.

However, there may be employers who operate a slightly different pension scheme. These employers should contact TPR directly to check their pension status, as the increases are dependent on different scheme rules and criteria.

Unsure of the regulations? Get up to speed

What should you do

  • The Pensions Regulator recommends that the employer informs all their employees about the increase in contributions, however this is not a legal requirement.
     
  • Some employers may already be contributing over and above the required 8%. If you are, then no action needs to be taken. However, both employers and employees can choose to pay in more than the minimum contributions required if they so wish.
     
  • It may also be worth checking with your pension provider that they are continuing to make the changes and that they are still using a qualifying scheme.
     

Did you know that you also have to re-enrol your employees?

Every three years employers must put eligible members of staff back into an automatic enrolment pension scheme. This is called ‘re-enrolment’.  Some employers are still unsure about when they need to complete their re-enrolment duties.

  • All you have to do is choose a date within a six month window which is three months either side of the third anniversary of your original staging date.
     
  • You must then complete a re-declaration of Compliance – click here to discover more
     

Why do I have to do this?

Re-enrolment and re-declaration is your legal duty. The Pensions Regulator is keen to encourage employees to save, especially as this will boost their retirement income, and if any employer is found not to be meeting their duties then they may be eligible for a fine.

  • A fixed penalty fine starts at £400 and increases at a daily rate of £50 to £10,000 depending on the number of employees and circumstances. Click here for guidance from TPR
     
  • If you delay your compliance, the employer will be expected to back date contributions relating to both employees and employers to place them in the position that they would have been if the employer had complied on time.
     

To discuss how this may impact your business please contact us on: 01892 546546