Auto Enrolment – Increase in contributions coming into force this month

Auto enrolment has been with us for some time now. As charities and third sector organisations will recall the first major test (apart from setting up compliant arrangements in the first place!) for auto-enrolment came in April 2018 when the “minimum contributions” increased from 2% to 5% of ‘qualifying earnings’, with an employer paying a minimum of 2% – meaning that workers would typically meet the remaining 3%. This month sees the second big test.

As of this month, there is another increase, with minimum contributions rising to 8%, of which the employer must pay a minimum of 3% and the worker will typically pay 5% (unless the employer chooses to pay some or all of the worker’s share).

It is important that charities and third sector organisations have a budget in place for this increase. If there are service contracts in place, is there a “change of law” or a “price adjustment mechanism” in place which reflect the uplift in staffing costs?

The workforce should also be aware that their contributions will also increase from this month.

Charities and third sector organisations should engage with their auto-enrolment providers to ensure they are fully compliant with the changes.

How can we help?

We are currently advising a number of third sector clients on these particular issues. Please do not hesitate to get in touch if you want to discuss your options.

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