Auto enrolment has been being implemented since April 2012. By law, Auto enrolment minimum contributions will increase in two phases: 6 April 2018 and then again on 6 April 2019.

Currently, the minimum pension contribution is a total of 2% on the standard contribution basis. This will rise to 5% in April 2018 (of which employers must pay at least 2%), and again to 8% in April 2019 (of which employers must pay at least 3%).

It is important to start thinking about the increases and these key dates. Your payroll team will need to be prepared and ready to make the necessary adjustments, as will your IT department if you have bespoke payroll software.

If you use Ellacotts payroll services, these changes will be applied automatically, and we will correspond with you directly where relevant.

Some pension providers will be writing to your employees. However, it is good practice for you to communicate this change to your employees. The Pensions Regulator has provided a template letter for you to use.

From 6 April 2018 and 6 April 2019, you must make at least the ‘employer minimum contribution’ shown in the table below. This is based on an employer calculating their minimum pension contributions on qualifying earnings. These percentages can vary if an employer calculates contributions using different elements of pay.

Employer minimum contribution Employee contribution Tax relief on employee contribution Total minimum contribution
Until 5 April 2018 1% 0.8% 0.2% 2%
6 April 2018 – 5 April 2019 2% 2.4% 0.6% 5%
6 April 2019 onwards 3% 4% 1% 8%

If the current contributions from you and your employees already meet the minimum requirements for April 2018 and April 2019, you do not have to take any action.

If you have any questions on Auto enrolment, please do get in touch.