Since automatic enrolment commenced in October 2012, the minimum contribution was set at 2%*, of which the employer must pay at least 1%. This is usually set at basic pay or ‘qualifying earnings’.
This minimum is increasing as follows over the next two years:
|Date effective||Employer minimum contribution||Staff contribution||Total minimum contributions|
|Currently until 5th April 2018||1%||1%||2%|
|6th April 2018 to 5th April 2019||2%||3%||5%|
|From 6th April 2019 onwards||3%||5%||8%|
*Some schemes have been set up to require a different set of minima though the majority would adhere to the table above.
The Pensions Regulator is writing to employers to remind them of the increase due from April 2018. This is to ensure that they apply the correct increases at the right time but also that they consider the impact on their staff.
If you are currently making contributions based on the minimum allowable you may wish to consider how you are going to communicate to the staff this increase how you are going to deal with staff who say they cannot afford the increase or ask to pay less.