As of 6 April 2019, the minimum contributions you and your staff pay into an automatic enrolment workplace pension scheme will increase. With the deadline fast approaching, it is expected that you’ll have made your staff aware of the changes. Businesses could face a fine if the right minimum contributions are not being paid from 6 April 2019.

Does the increase apply to you?

If your staff are in a pension scheme for automatic enrolment, you need to take action. All employers are required to make sure at least the minimum amounts are being paid.

For those businesses that don’t have staff in a pension scheme for automatic enrolment, or if you are already paying above the minimum amounts, you are not required to act. Likewise, if you’re using a defined benefits pension scheme the increases do not apply.

What are the increases?

Contribution percentage

Employers will be required to make at least the minimum contribution of 3%, while staff must make up the difference. For those employers that have decided to make the total minimum contribution, staff will not need to pay anything towards their scheme.

The amount paid into the pension scheme will vary depending on the type of scheme and the rules of that scheme. The amount staff contribute could also vary depending on the type of tax relief applied by the scheme.

There are certain considerations that must be taken into account when calculating contributions for the minimum 8% rate:

• Salary
• Wages
• Commission
• Bonuses
• Overtime
• Statutory sick pay
• Statutory maternity pay
• Ordinary or additional statutory paternity pay
• Statutory adoption pay

What actions are required?

Under the Pensions Act 2008, it is the responsibility of the employer to make sure the right minimum contributions are being paid. To ensure the right contributions are made from 6 April 2019, follow the steps below:

1. Work out which increases apply
2. Work out which staff it applies to
3. Make sure the way you calculate contributions and pay them to the pension scheme is ready to apply the increases

To discuss how to implement these changes, please contact your usual Campbell Dallas advisor, or:

Carol Wright - Partner, Edinburgh, and Head of Payroll in Scotland

Carol Wright

Partner and Head of Payroll

0131 440 5000

The information in this article should not be regarded as financial advice. This is based on our understanding in March 2019. Laws and tax rules may change in the future.