Auto-enrolment: ‘As an employer, you provide the teabags … but you’re also responsible for providing a workplace pension.’
As this reminder from the Pensions Regulator (TPR) shows, every employer now has responsibilities under the pensions auto-enrolment (AE) regime. If a business employs at least one person who is classed as an employer, it must enrol certain staff into a pension scheme and also contribute towards it.
Auto-enrolment increasing contributions
The auto-enrolment regime is not static. From 6 April 2018, changes to the minimum AE contributions that must be made by both employer and employee apply. The total of minimum contributions rose to 5% from this date. This is made up of a minimum employer contribution of 2% and staff minimum of 3%. From 6 April 2019 these minimums will rise again, to 3% employer contributions and 5% staff contributions.
The government is closely monitoring the workplace pensions scheme. Whilst TPR has published figures showing a record number of 9.3 million people saving for a future pension, there is still concern that, even with the projected increase in AE contributions, individuals will be unlikely to achieve ‘the retirement to which they aspire’.
A recent government review pledges to focus on younger people, part-time workers and the self-employed in the next round of AE developments. It has been suggested that the age threshold should be lowered from 22 to 18, and that pension contributions be calculated from the first pound earned, rather than from a lower earnings limit. However, these changes are not expected to be introduced until the mid-2020s.
For information of users: This material is published for the information of clients. It provides only an overview of the regulations in force at the date of publication, and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material can be accepted by the authors or the firm.