Employers: take note

 In Legislation



From April 2018, there are changes to workplace pension schemes which have to be put into effect to comply with the law. At present, employers and employees pay 1 per cent each of staff salaries into workplace pension schemes. This makes a total of 2 per cent. From April 2018, the total will increase to 5 per cent. Employers have to pay at least 2 per cent, therefore if the employer pays the minimum 2 per cent, then the staff will pay 3 per cent. If the staff contribution is to remain at 1 per cent, then the employer contribution has to go up to 4 per cent.



We feel it would be for the best if you were to discuss this with your staff, and agree between you who contributes what. If your staff contribution remains the same, your contribution as an employer has to go up from 1 per cent to 4 per cent. If your staff are happy to pay 2 per cent, then you as the employer will have to pay 3 per cent. You cannot, as an employer, pay any less than 2 per cent.

If some of your staff are happy for their contribution to increase and some are not, that is technically manageable, but you have to be happy as the employer that you are being fair to all your staff. If any member of staff gets into financial difficulties and cannot afford the contribution, (s)he can opt out of the workplace pension scheme, and opt back in when circumstances permit. You can do this up to 3 times in any tax year.

The above points have been confirmed to us by Smart Pensions. Should any questions arise please do not hesitate to get in touch.



May we ask that all our clients who have employees in a workplace pension scheme to advise us no later than 21 April 2018 regarding what they have agreed with their employees on the above. If we hear nothing from you, we will assume that you as the employer will pay 2 per cent and the staff 3 per cent, which is the legal “default” for compliance.

– By Stephen Handley, FCCA

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