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Automatic enrolment pension contributions

The minimum contributions that you and your staff pay into an automatic enrolment workplace pension scheme are set by the government.

Automatic enrolment applies to all employees and automatic entry into this scheme is dependent upon an employee’s annual earnings.

Current contribution rates are as follows:-

Date Total minimum contribution  Employer minimum contribution
06/04/2019 onwards 8% (including 5% staff contribution) 3%

For the 2020/21 tax year employee annual earnings range is between £6,240 and £50,000 a year (£520 and £4,167 a month, or £120 and £962 a week). These figures are reviewed each year by the government.

You  need to assess anyone who works for you each time you pay them and put them into a pension scheme if they meet the criteria for automatic enrolment. You must contribute at least the right minimum amount at the time and any further increases required.

By law a total minimum amount of contributions must be paid into the scheme. You, the employer, must make a minimum contribution towards this amount and your staff member must make up the difference. If you decide to cover the total minimum contribution required, your staff won’t need to pay anything.

Contributions to this scheme are based in the following earnings:
• salary
• wages
• commission
• bonuses
• overtime
• statutory sick pay
• statutory maternity pay
• ordinary or additional statutory paternity pay
• statutory adoption pay

The staff contribution rate may vary depending on the type of tax relief applied by your scheme. If you are unsure check your scheme documents.

If you use a payroll provider or payroll bureau they should be able to assist you with the processes.

You will need to advise your employee of their choices around auto-enrolment at the appropriate time.  Depending on what you have agreed with your accountant/payroll or pension scheme provider, they may write to your staff on your behalf or supply you with letters that you can use to administer this scheme.

If you need any further guidance please get in touch

“There is evidence to suggest that good HR practice and people management in SMEs are key factors in strong business performance and can lead to increased productivity.”

- CIPD people Skills Project 2017


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