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Auto-enrolment changes

Auto-enrolment changes

Employers’ need to be aware the auto-enrolment pension contributions increase from April 2019 to 5% employee and 3% employer. Quite a big increase!

The 8% total contribution is mandatory for all auto-enrolment qualifying schemes such as NEST. What is perhaps less well known is that the employer could pay more and the employee less if they wished to, as long as the total is at least 8%.

Also, contributions can be based on ‘qualifying earnings’ (more than £512 per month) or on all earnings.

For employees there is a big jump in contributions from 3% to 5%. It is likely that some will choose to opt-out as a result.

The whole point of auto-enrolment is to encourage a big nationwide shift towards pension saving. There is an onus on employers’ to contribute, but only if the employee is also willing to contribute. Whilst this is an admirable thing it does not necessarily fit all circumstances and budgets. If it does not suit the employee we would always suggest they sit down together and work out whatever suits them better.

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