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Changes to Minimum Pension Contributions from April 2018

Under the Pensions Act 2008, the minimum amount an employer must pay into auto-enrolment pension schemes will increase over the next two years, with minimum contributions initially rising effective from 6th April 2018 and further increases outlined from 6th April 2019.

In recent times, and up until 6th April 2018, the minimum contribution has been set at 2%, of which the employer is required to contribute at least 1% of the employee’s salary. However, the table below shows the minimum contributions employers must pay at the specified dates, with the lowest possible contribution being 3% after 6th April 2019 as the total minimum contribution increases to 8%.

The changes exclusively apply to auto-enrolment pension schemes, and therefore employers who don’t have staff in auto-enrolment will not need to make any alterations. Similarly, in several cases, contributions may already be above the minimum threshold and likewise no changes will be necessary.

It remains the employer’s responsibility to ensure pension schemes are qualifying and that contributions are deducted accordingly, effective from both 6th April 2018 and 6th April 2019.

Jack Biggs, Accounts Assistant

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Posted in: Blog, Cloud Accounting, Pensions, Tax