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Author: JW / / Latest News

Auto-Enrolment Pension Contribution Rise

Pension Contributions image


As of April 6th 2018, pension contributions are set to rise from 2% to 5%. The minimum for employers to contribute is rising from 1% to 2%.

As it is now

Currently there is a roll out of the auto enrolment scheme. This will be complete by October 2018, meaning by then all employers will have to contribute to an employees pension. Pension contributions are currently at 1% for an employer and the employee. Meaning that an employee that is 22 or over, earning £10,000 or more per annum have 2% of their wage contributed to their pension. Meaning their pay is more like £10,100 per annum after the employer has contributed.  


What it Will Be

On the 6th of April pensions contributions will change to an overall 5%. The minimum from the employer being 2%. Employees will have to make up the difference to make it 5%. So, the minimum contribution for employees will be 3%. The trigger will be the same as now (22 years of age or older earning £10,000 or more).

Employers are free to set what pension contribution above 2% they wish. This can be used as an incentive during a recruitment process for example. If an employer does choose to raise their contributions above the 5% then employees will not have to contribute. If you pension contribution scheme already exceeds 5% then you don’t have to alter anything. Alternatively, if your pension contribution scheme is below 5% this will have to be altered with your payroll before the 6th of April. If the the employer does not comply, fines from the Pension Regulator could apply.

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