What next for Auto-Enrolment?

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Joan Dennett | Towers + Gornall

Minimum contribution % rate increases

From 6th April 2018 the minimum rate of contributions into an auto enrolment pension scheme will increase from the present minimum of 2% (1% employee & 1% employer ) to a minimum of 5%. The employer’s contribution must be at least 2% leaving the employee to pay the 3%. Of course the employee’s contribution could be 2.4% if normal tax relief is available.

Don’t get caught out  – check that your software will implement this automatically or more likely you will have to manually update these % rates in your software. Employers are also required to notify in writing each job holder that this will affect before the increased deductions are taken in April.


Just when employers thought they had survived Auto-Enrolment there comes Auto-Re-enrolment.

All employers will go through this on a 3 year cycle based on their original staging date. The employer has a 6 month window to select a date to start this process and this should be 3 months either side of their original staging date. i.e. original staging date 1 October 2015 then the employer can choose a date from 1 July 2018 all the way through to 1 January 2019.

On the selected date, employers, must again assess their workers and those that are eligible but have previously “opted-out” or left an auto-enrolment pension scheme more than 12 months before the re-enrolment date must be immediately re-enrolled into a compliant scheme. No postponement period can be selected this time though and contributions must be deducted straight away. Employees must be sent a letter from you, the employer, telling them what is happening and why they have been re-enrolled. Each re-enrolled worker then has 5 weeks to “opt-out” again to receive their contributions back or cease membership of the scheme after that opt-out period.

The employer must then complete a Re-Declaration of Compliance with The Pensions Regulator within 5 months of the re-assessment date. Failure to do so could result in a £400 fine.

If you feel that this is the last straw or need any help with this or indeed any other payroll matter then please feel free to give me, Joan Dennett, a call in the Payroll Department at Towers and Gornall – 01995 600600 or email me at joand@tagac.co.uk. Happy to help.

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