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The minimum contributions that you and your staff pay into your automatic enrolment workplace pension scheme are increasing. This is also sometimes known as phasing.

It is your responsibility to make sure these increases are implemented.

Automatic enrolment has so far put more than nine million workers into workplace pension schemes.

All of these people are now on the road to saving for a better retirement, but it’s only the start. Now that they’re saving for their future, the next step in automatic enrolment is for the amount staff pay into their pensions to increase, helping them to gradually adjust to saving money for their pension pot.

When do the increases take effect?

Minimum contributions are increasing in two phases. The first increase must be in place from 6 April 2018 and the second from 6 April 2019.

Who does this apply to?

All employers with staff in a pension scheme for automatic enrolment must take action tomake sure at least the minimum amounts are being paid into their pension scheme. This applies to you whether you set up a pension scheme for automatic enrolment or you decided to use an existing scheme.

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

Additionally, if you’re using a defined benefits pension scheme then the increases do not apply.

So what are the increases?

The amount you and your staff pay into your pension scheme will vary depending on the type of scheme you have chosen and the rules of that scheme. You can find this information in the scheme documents sent to you when you set up the pension scheme or you can speak to your pension provider.

Most employers use pension schemes that currently require a total minimum of 2%

contribution to be paid. The calculation for this type of scheme is based on a specific range of earnings. For the 2017/18 tax year this range is between £5,876 and £45,000 a year (£490 and £3750 a month, or £113 and £866 a week).

By law a total minimum amount of contributions must be paid into the scheme. You, the employer, must make a minimum contribution towards this amount and your staff member must make up the difference.

If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.

The staff contribution rate may vary depending on the type of tax relief applied by your scheme. If you are unsure check your scheme documents.

What if I am using a pension scheme which requires different minimum contributions?

You may have agreed with your pension scheme to base minimum contributions on different elements of staff pay. If this is the case you will need to apply different increases.

Find out what increases apply to you if you are calculating contributions using different elements of staff pay.

If you are looking for advice on this or another staff issue feel free to contact us on 07850741787.