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Introduction to this document

Letter confirming pension contribution increase

Use our letter to advise workers of the increases in the minimum contributions that must be made to automatic enrolment workplace pension schemes.

Effective date

The minimum contributions that you and your workers pay into your automatic enrolment workplace pension scheme are increasing again. The first phase of the increases in minimum contributions took place on 6 April 2018 and the second phase must be in place from 6 April 2019 onwards. If you have staff in a workplace pension scheme, it’s your responsibility to make sure that at least the minimum amounts are being paid into it. However, you don’t need to take any action if you’re already paying above the increased minimum amounts. Additionally, if you’re using a defined benefits pension scheme then the increases don’t apply.

Increased amounts

A total minimum amount of contributions must be paid into your pension scheme. You must make a minimum contribution towards this amount and your worker must effectively make up the difference. From 6 April 2019 onwards, the total minimum contribution is 8% of qualifying earnings (up from 5%) and the employer’s minimum contribution is 3% (up from 2%). If you only pay this 3% minimum, it therefore means that the worker’s minimum contribution is 5% (up from 3%).

Implementation

Make sure the way you calculate contributions and pay them into your pension scheme is ready to apply the increases. You should also let your staff know about the increases and this is where our Letter Confirming Pension Contribution Increase comes in. Our letter sets out details of both the total and employer minimum percentage contribution increases and then it confirms what effect those increases have on the worker’s own percentage contribution. If the mandatory increases happen in the middle of a pay period, which they will if your staff are paid monthly, you must make sure the increased amount of contribution was effective from 6 April 2019, i.e. not from the start of the next pay period.