Are you prepared for 6 April 2019?
So the question is are you ready for 6 April 2019 as we kick off new tax year with tons of latest updates and law changes. There are number of changes happening in pension contributions for employers and employees.
Your duties
You and your employer must pay a percentage of your earnings into your work place pension scheme. In most automatic enrolment schemes, you’ll make contributions based on your total earnings between £5,876 and £45,000 a year before tax. Your total earnings include: salary or wages from 6 April 2019 to 5 April 2020
By law, the total minimum contributions you must pay into their staff’s workplace pension schemes increase on 6 April 2019. Your clients need to be ready for this increase, to make sure they’re paying the correct amounts into their staff’s schemes.
Are you ready?
From 6 April 2019, the total minimum contribution including employer and employee payments must be no less than 8% of qualifying earnings. Your clients must pay a minimum of 3%, with their staff making up the rest of the 8%.
Your can choose to pay more than their 3% minimum contribution if they wish. If they do, their staff won’t need to pay in as much to meet the total minimum contribution of 8% of qualifying earnings.
|
Date effective |
Total minimum contribution |
Employer minimum contribution |
Staff contribute the remainder |
|
Current rates |
5% |
2% |
Up to 3% |
|
6 April 2019 |
8% |
3% |
Up to 5% |
You should be ready to calculate contributions using the new rates the first time they pay their staff from 6 April 2019.
You may have agreed with their scheme provider to calculate minimum contributions in a different way. This is called certification, and details of what they need to do can be found on our website.
Next steps
- it should be simple for the new rates to be applied, but your should prepare now by contacting their payroll and software service providers to make sure their systems are ready
- we recommend that your write to their staff to let them know about the increase in contributions – letter templates are available for employers and for employers of care assistants as well as in other languages for staff who may not speak English
Please note, if you are already contributing more than the total minimum of 8% into their staff’s workplace pension schemes, or they use a defined benefit (DB) scheme for automatic enrolment, they don’t need to take any action. And if any of your staff asked to be put into a scheme that you don’t pay into, the increases don’t apply to them.
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