As an employer, you, by law, have minimum contributions you need to pay into a qualifying workplace pension scheme for your employees.
From April, the minimum amount paid in by you – and your employees – is increasing.
How much the contributions increase depends on the definition of “pensionable pay” you have been using. The table below details the new minimum rates depending on your “pensionable pay” basis, which will become effective from April 6.
The amounts will increase once again in April 2019 and we will write to you before that to let you know what’s happening.
If you are exceeding the minimum increased requirements already, you don’t need to do anything.
However, if you are paying the minimum, you will need to liaise with your payroll provider to learn how to update your in-house payroll software. You do not need to consult with employees as these changes are legislative. However, if you plan an increase more than the above, you will need to advise employees accordingly.
You can apply the change within any pay reference period in which April 6 falls – i.e. if your pay reference period runs from April 1-30, you can apply the increase from April 1 without needing to consult with scheme members. By increasing the contributions from the beginning of the pay reference period, you will not be required to calculate part month contributions on the old contribution structure.
To reduce queries from scheme members following the increase, we have come up with some suggested wording to help you communicate this – get in touch with your employee benefits consultant to find out more.
We also recommend – should you issue any documents detailing the contribution increases – that care be taken to ensure these documents are updated.
For any more information, contact your employee benefits consultant.