Another financial year is almost upon us and with it comes the final phase in the rollout of the Government’s flagship pension saving scheme: auto-enrolment.
Employers are legally obliged to automatically enrol all workers who earn more than £10,000 a year and are aged between 22 and state pension age.
A significant milestone was passed recently, with the number of eligible employees enrolled into their workplace pension passing 10 million.
That’s no mean feat considering the Office for National Statistics claims there were an estimated 32.6 million people in work at the end of December 2018.
Auto-enrolment affects both business owners and their employees, and with the final planned increase to minimum contributions coming in on 6 April 2019 it pays to be aware.
Auto-enrolment for employees in 2019/20
Many employees will experience a slight decrease in their net pay when their minimum contributions rise from 3% to 5% in April 2019.
Subject to another Government U-turn in next week’s Spring Statement, this increase will partially be offset by the personal allowance increasing to £12,500 for 2019/20.
There are fears some lower-paid employees will opt out of their workplace pensions due to the impact on their take-home pay from April.
Auto-enrolment for employers in 2019/20
According to the latest research from the Pensions Regulator, almost 1.45 million employers are making minimum contributions towards their employees’ workplace pensions.
From next month, those businesses face a 1% increase in their minimum contributions towards their eligible employees’ workplace pensions as the rate rises from 2% to 3%.
To prevent staff from opting out, many employers may be under pressure to either increase their minimum contributions above the mandatory 3% or issue pay rises.
Dunkley’s auto-enrolment solution
Our comprehensive auto-enrolment solution takes care of all of your business’s workplace pension needs, while keeping you compliant.
Failure to comply with auto-enrolment legislation has seen the number of fines issued to businesses more than double in the last two years – from 14,707 in 2016/17 to 36,137 in 2017/18.
Since auto-enrolment was introduced in October 2012, we have teamed up with financial advisory firm Chase de Vere and both of us endorse NOW: Pensions as the best provider.
Director Mike Dunkley handles our auto-enrolment service. To find out more, call us on 01454 619900 or email us at email@example.com