In the words of HMRC ‘We’re all in …’
Every employer must automatically enrol workers into a workplace pension scheme who –
- are aged between 22 & State Pension age;
- earn more than £10,000 a year;
- work in the UK.
This is to encourage people to start taking responsibility to save for their retirement. Your staff can opt out if they want to but that means losing out on employer and government contributions.
How much will I have to contribute?
There is a minimum total amount that has to be contributed by the employee, employer and the government in the form of tax relief. This total minimum contribution is currently set at 2% of earnings (0.8% from the employee, 1% from the employer and 0.2% as tax relief).
The minimum contribution applies to anything earned over £5,824 (in the tax year 2016-17) up to a limit of £43,000. This includes overtime and bonus payments. So for an employee earning £18,000 a year the minimum contribution would be a percentage of £12,176 (the difference between £5,824 and £18,000).
The total minimum contribution is currently set at 2% of earnings (0.8% from the employee, 1% employer and 0.2% as tax relief). From October 2017, it will increase as follows: October 2017 to September 2018: 5% of earnings (2.4% employee, 2% employer and 0.6% as tax relief) and from October 2018 onwards: 8% of earnings (4% employee, 3% employer and 1% as tax relief)
We can help communicate the principles of Auto-Enrolment with your employees and how to maximise their pension savings to provide for a comfortable retirement.
With our knowledge and experience of the pensions market and understanding of the rules of auto enrolment we are able to provide solutions which will enable you to introduce the new pension arrangements with minimum disruption.