Auto-enrolment pension rules
The Pensions Act 2008 brought the requirement for employers to enrol particular qualifying employees in a workplace pension scheme, and to make scheme contributions. This auto-enrolment regime provides for an increase in minimum contributions on set dates – sometimes called phasing.
The auto-enrolment calendar has been aiming to get to minimum contribution levels of 8% by 2019, and 6 April 2019 was the date for the final phased increase. Employers have the responsibility of ensuring these increases are put into effect.
They apply to any employer with staff in a pension scheme for automatic enrolment, whether they set up a pension scheme for auto-enrolment or use an existing scheme. Where employers already pay more than the increased minimums, no further action is necessary, and where employers use a defined benefits pension scheme, the increases do not apply.
From 6 April, the total minimum contribution became 8%, with the employer minimum contribution being 3%. Employers can choose to pay more than the employer minimum, with the staff member making up any shortfall. Contributions for this type of scheme are calculated based on a specific range of earnings and include salary, wages, commission, bonuses, overtime, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity pay and statutory adoption pay.
A minority of employers use pension schemes which base minimum contributions on different elements of staff pay: they need to apply different minimum auto-enrolment contribution increases.
Help at hand
Earlier this year, the financial press reported the fact that the number of fines for auto-enrolment errors seemed to have risen markedly as businesses with fewer than 50 employees came within scope of the rules for the first time. This carried the suggestion that smaller employers, lacking specialised payroll resources, could be more at risk. The Pensions Regulator offers a wealth of useful guidance bit.ly/2FrMS1q and we should be delighted to do all we can to help with the auto-enrolment rules. Please do not hesitate to contact us for further advice.