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Auto-Enrolment - Increase in Minimum Required Contribution Levels

Under the Pensions Act 2008, every employer in the UK has a duty to enrol certain staff into a pension scheme and contribute towards it.

Employers are reminded that the minimum required contribution levels to auto-enrolment pension schemes or qualifying workplace pension schemes (based on a worker's 'qualifying earnings') increase from 6 April 2018.

From that date, the employer minimum contribution rate will be 2 per cent and the staff minimum contribution rate will be 3 per cent.

There will be a further increase from 6 April 2019, when the employer minimum contribution rate will rise to 3 per cent and the staff minimum contribution rate will rise to 5 per cent.

The scheme rules or agreements will need to be amended for 6 April 2018 to ensure that it continues to meet the qualifying criteria.

If a pension scheme does not increase its minimum contribution levels in line with the statutory requirements, it will no longer be a qualifying scheme for existing members and cannot be used for automatic enrolment.

Pension scheme trustees and providers, and payroll and software providers, should ensure they are ready to comply.

Further information and detailed guidance for employers can be found on the website of the Pensions Regulator.

The contents of this article are intended for general information purposes only and shall not be deemed to be, or constitute legal advice. We cannot accept responsibility for any loss as a result of acts or omissions taken in respect of this article.