Everything That You Need To Know About The Recent Auto Enrolment Changes
So you may have been bombarded by the recent Auto Enrolment changes… at My Accountancy Place, we’ve digested this information for you and broken it up into bitesize pieces highlighting only the KEY things that you need to be aware of.
Currently, the gross contributions are 2% of qualifying earnings. – being 1% Employer and 1% employee [including the 0.2% HMRC make up for Tax]. As of 6/4/2018, this is set to increase to a minimum 5% – being 2% Employer and 3% Employee – HMRC will still make up the 0.2% tax relief on the 3%.
What do you NEED to be aware of?
- Qualifying earnings remain the same at £5,876.
- The employer can choose to pay the full minimum contribution meaning staff may not have to contribute at all – dependant on scheme rules.
- Employees and employers can choose to contribute more. If an employee chooses to contribute more an employer doesn’t have to match this contribution increase.
- To remain a qualifying scheme, all automatic enrolment pension schemes with contribution rates that would be below the minimum [5% as of 6/4/2018] amount after the rate increases must apply the higher rates.
- These increases don’t apply to staff who asked to be put into a scheme that you don’t have to pay into.
- No further action required for those without staff in a qualifying pension scheme or already paying above the minimum contribution of 5% gross.
- You should check with your payroll provider to ensure they accommodate the increases – or this will have to be done manually to ensure the increased amounts are paid in time.
- If you complete your payroll in-house, then you need to be certain that your software is ready for these increases.
- If your scheme doesn’t support the increased contributions, you should speak to your pension provider about amending the scheme rules to allow the new rates.
- If you outsource your payroll service, check that they’re ready for the increases, and make sure they know when to deduct them.
- You should also consider the need to consult your staff if they decide to increase the minimum contribution levels before the 6 April 2018 and 6 April 2019 increases.
- As of 6/4/2019 this is set to increase to 8% – being 3% Employer and 5% Employee
Workplace Advice Group or your pension provider may be able to support you with how to communicate this with your staff. It’s not legally required to write to staff about the changes, but it is good practice and something we encourage you to do. You can find a template letter here.
Catch Paul Barnes interview Rachel Moran on the recent changes below –[arve url=”https://vimeo.com/255362861″ align=”left” /]