Employee Pensions: what you need to know
As you may already be aware, the statutory minimum contributions to your auto enrolment pension scheme are increasing from 1st April 2018. This means the amount of pension contribution you make will increase, along with the amount paid in by the company.
The contributions made into your Now: Pensions plan are based on something called ‘band earnings’. For the current tax year, this is your earnings between £5,876 and £45,000. For the next tax year, this is likely to increase to earnings between £6,032 and £46,350.
You currently pay the minimum amount of 1% of band earnings into your pension which is matched by a 1% contribution from the company. From April 2018 the minimum amount you are required to pay will increase to 3% of band earnings. The amount of company contribution will also increase to 2% of band earnings. This means there will be a total of 5% of band earnings being paid into your pension from 1st April 2018.
You will notice this change to your pension contribution levels in your April 2018 pay.
Please note the government requires us to automatically increase your pension contributions. If you do not wish to continue to contribute to the Now Pension scheme you have the right to opt out however company contributions will also cease. You can do this online via your own personal Now Pensions online account.
It is also worth highlighting that a further statutory increase in contributions will occur from 1st April 2019. At this date, the minimum contributions will rise to 5% of band earnings from employees and 3% of band earnings from the company.