Automatic Enrolment: Increases in minimum workplace pension contributions

04 Dec 2017


In April 2018, the minimum contribution levels of workplace pensions are due to increase. All employers will be required, by law, to increase the minimum contribution from the current level of 2% to 5% of qualifying earnings.

This change will see a rise in your contribution, as an employer, to at least 2%. The employee contribution will also go up so their contributions make up the shortfall needed to bring the total minimum contribution up to 5%.

In April 2019, contribution levels will see a further increase, with the employer required to pay a minimum of 3% and total contributions needing to reach 8%. Employees must then make up the 5% difference to ensure the total contribution adds up to 8%.

Who do the increases in contributions apply to?

The increase in contribution applies to you if you have staff in an automatic enrolment pension scheme. You as an employer are responsible for ensuring that the minimum enrolment contribution is being met by both yourself and your employees.

If you do not have any staff in the automatic pension scheme, or your staff are already paying at least the increased minimum amounts, no action needs to be taken.

How to prepare for the increases:

Make sure that you are prepared in advance for the increases, this way the increase in minimum contributions should be a simple process.

  • Its important your payroll is ready to deduct the increased contributions when they rise in April 2018 and again in April 2019, otherwise your workplace pension schemes may no longer be qualifying resulting in the right contributions not being paid at the right time.
  • Pension schemes should already be making the necessary changes to support the increases, and will communicate this. However, it is still your responsibility as an employer to make sure: You’re using a qualifying scheme, the right amount of pension contributions are being deducted.
  • When your staff were first automatically enrolled into the scheme, the letter they received from you should set out that contribution levels will increase over time. There is no additional legal requirement to write to staff again, but it is good practice and may minimise queries and reduce the number of staff dropping out.

For more information and guidance click here.