April 2019 sees the third and final increase in contributions planned for your employee’s workplace pension scheme.
From this date the minimum contribution required for a workplace pension will increase to 8%.
As an employer your new minimum contribution will be least 3%. Some employers choose to pay more.
The employee will have to make up the difference, normally 5%.
Contributions are still deductible expenses for corporation tax.
Remember, there’s several different ways that you can calculate contributions for your staff. Here are a couple of examples.
In each case, these examples assume that 100% of your employee’s salary is being used for these contributions.
Some employers choose to limit contributions by making use of the Lower Earnings Limit (LEL) and the Upper Earnings Limit (UEL). If you would like to talk about your scheme setup and the options available to you give us a call.
The following table is based on an employee aged 25, earning £25,000 per year. Contributions are calculated on full salary.
| Contributions Now | Contributions in April | Change | |
| Employer (min) | 2% (£41.67) | 3% (£62.50) | +£20.83 |
| Employee | 3% (£62.50) | 5% (£104.17) | +£41.67 |
| Total | 5% (£104.17) | 8% (£166.67) | +£62.50 |
Other rules about scheme membership have not changed. Employees still need to be aged between 22 and state pension age, and earning more than £10,000 a year to be enrolled automatically.
Your staff have the right to join the scheme if they are not enrolled automatically enrolled, and they can opt out if they don’t wish to be a member.
Remember, an employer is not allowed to influence a member’s decision to opt-out.
In some cases you have the right to refuse to enrol a staff member, but this is rare. An example would be where a non-eligible employee who was previously a scheme member has left service and come back, and wants to rejoin the scheme. Ask us if you’re not sure.
Remember, it’s important that everyone saves for their retirement. Providing your staff with a good quality pension scheme is a start.
But what about you? Proper saving give you the freedom to retire on your terms and not just when you can’t work any more. There’s several ways you can save money but pensions are the best long-term product currently available.
The workplace pension scheme you’ve arranged might not be the best option for your own retirement planning.
If you would like to talk to one of our advisers about your options, call us on 020 8559 2111. We’d love to help.
