Our payroll services team would like to remind all French Duncan clients that changes to pensions auto-enrolment are due to come into place from April 2019. Regulatory auto-enrolment for pensions is offering most people in the UK workforce a valuable means of building a pension cash pot. However, company finance directors, finance teams and payroll administrators need to make provisions for a further increase in contributions taking place from 6 April 2019.
Increased pensions auto-enrolment contributions from April 2019
The existing 2018/19 pensions contributions and deductions you are required to make amount to a minimum of 3% of gross salary for qualifying employees and 2% for employers. From 6 April 2019 the requirements increase to 3% minimum employer contribution and 5% staff contribution.
All businesses operating PAYE payrolls are required by law to make the minimum contributions for all their qualifying employees at the very least. Where employers cover the current minimum contribution requirement of 5%, which rises to 8% from next April, staff are not required to make contributions.
The 2018/19 employee earnings levels affected by pension contributions legislation range from £6,032 to £46,350. The increases to pensions contributions requirements relate to all auto-enrolment pension schemes and all existing pension schemes apart from defined benefits schemes. You can find out more about auto-enrolment pension schemes on The Pensions Regulator website.
Implementing these increases
You will need to inform all your employees about these changes and a template letter is available on The Pensions Regulator website, if required.
You'll also need to clarify which increases apply to your business. This information can be accessed from your pensions scheme documentation or direct from your pension scheme provider.
These changes will apply to all qualifying employees except for individuals that requested you put them into a scheme which does not require employer contributions.
Your payroll processing software will need to be updated so these increases can be applied from 6 April 2019 onwards. So, if you do use the services of a payroll bureau you should confirm that these requirements will be in place. If you run a monthly payroll the April 2019 pay run needs calculating at the new rates from 6 April, so if your software does not support these types of pro-rated contributions you'll need to speak with your pension scheme provider and software supplier or payroll bureau to work out exactly how you will handle these changes.
French Duncan Payroll Services provide comprehensive payroll support to all clients. Get in touch if you would like information about our payroll services to business clients and the way our auto-enrolment software processes legislative changes of this nature.
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