23 January 2018

Minimum pension contributions will soon be increasing

You will be aware that by law, every employer must make increases to the minimum contributions for their automatic enrolment pension scheme. The minimum contribution will also increase for employees.

The Pensions Regulator has already communicated these increases to employers, with a reminder of the dates that this comes into effect. We also wrote to all employers, who are not already meeting these levels, in July 2017 with a reminder of this regulatory requirement.

If employers are already paying above the minimum amounts or are not using their scheme for auto enrolment, they don’t need to take action.

The table below shows the minimum contributions that employers will need to pay and the dates when they must increase, as set out by the government. Employers and their employees can choose to pay more than the minimum if they wish.

Min contributions
Effective dates Employer minimum contribution Employee minimum contribution Total minimum contribution
 Currently until 5 April 2018 1% 1% 2%
 6 April 2018 to 5 April 2019 2% 3% 5%
 6 April 2019 onwards 3% 5% 8%

What does this mean?

From 6 April 2018 and then again from 6 April 2019, the way employers calculate and pay contributions into their pension scheme must be changed to reflect the increases above. It’s then their responsibility to make sure these increases are implemented and they should speak to their payroll provider to ensure they’re applied correctly.

Further information on contribution increases, and the steps employers need to take to set up these increases, can be found at www.thepensionsregulator.gov.uk/increase

We’ve created some sample communications, to help employers communicate the change to their employees, that can be downloaded below: