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Auto-enrolment: making employer contributions

 

Auto-enrolment: making employer contributions

Making the correct contributions to your workplace pension scheme is one of the most important tasks associated with auto-enrolment. Failing to make the minimum contribution or paying it late could land you with a fine from the Pensions Regulator.

How much do you need to contribute?

The minimum contribution rate for employers is currently 1% of the employee’s annual salary. A 1% minimum contribution from employees should be deducted from their gross income unless they choose to opt out of the scheme.

The minimum employer contribution rate is set to rise to 2% in the 2018/19 tax year and 3% the following year.

Consult the table below for a full breakdown of current and future contribution rates:

 

Date

Minimum employer contributions

Staff minimum contribution

Total contribution

Present – 05/04/18

1%

1%

2%

06/04/18 – 05/04/19

2%

3%

5%

06/04/19 onwards

3%

5%

8%

 When do you need to pay?

Payment dates for paying your contributions – as well as transferring your employees’ contributions – will be agreed with the pension provider.

However, the law obliges you to make contributions no later the 22nd day of the month after you pay your staff. Failing to pay on time risks being fined by the Pensions Regulator.

Record-keeping

Ensuring that you record accurate and up-to-date information will reduce the likelihood of missing payments or making incorrect contributions. You must keep records of employee gross earnings and contributions made by you and your employees for at least 6 years.

Make sure that you communicate any changes to employee earnings and contribution entitlements – as well as the details of new members joining the scheme – to your scheme provider. They require this information in order to keep track of contributions and report instances of non-payment to the regulator.

Your provider may request additional information about your contributions; if you do not provide this within 7 working days you could face a penalty from the regulator.

Get in touch

Our team can help plan for auto-enrolment.

Contact us on 01628 631 056 or email geoffk@knightandcompany.co.uk for more information.