Big changes from April 2018 for Auto-Enrolment: Increases in Minimum Contributions

Insights 20.11.2017 Author: Philip Harrison

You may already be aware that the minimum contributions under automatic enrolment will be going up from April 2018.

From 6 April 2018, the increase will take the total minimum contribution from 2% of qualifying earnings to 5% of qualifying earnings (of which the employer must contribute at least 2% of qualifying earnings whilst employees make up the difference of 3%).

There is no legal requirement or additional duties for employers to write to staff about the increases. When a member of staff was first automatically enrolled, the letter they received would have set out that contribution levels will increase over time. It is likely that many employees will be unaware of these changes and the impact it will have on their income.

Although there is no legal obligation to consult further with employees about the forthcoming contribution changes, it is always recommended to introduce appropriate consultation activities to enhance employee awareness and buy-in. Particularly in this case, it can provide an opportunity for employees to financially prepare for the statutory increases and potentially reduce the number of scheme leavers and opt outs.

To read more about auto-enrolment, please click here.

What next?

We can support and guide with practical solutions on any aspect of pension set up and management – from enhanced pension arrangements to administering and communicating legislative changes around auto-enrolment contributions. For further information, please get in touch with our specialist Auto-Enrolment Consultant Philip Harrison on the details below.