Pensions auto-enrolment: the story continues

‘As an employer you provide the teabags … But you’re also responsible for providing a workplace pension … It’s the law.’

All employers now have responsibilities under the pensions auto-enrolment (AE) regime, as this reminder from the Pensions Regulator (TPR) shows. Anyone employing at least one person is classed as an employer, and must put certain staff into a pension scheme and contribute towards it.

The regime does not stand still. From 6 April 2018, there are changes to the minimum AE contributions that must be made by both employer and employee. The total of minimum contributions rises to 5% from this date, being a minimum employer contribution of 2% and staff minimum of 3%. Further increases apply from 6 April 2019, when employer minimum rises to 3% and staff minimum to 5%.

The government is monitoring the AE regime closely. Whilst TPR has published figures showing a record number of 9.3 million people saving for a future pension, there is still concern that even the projected increase in AE contributions is ‘unlikely to give all individuals the retirement to which they aspire.’ A recent government review pledges to focus on younger people, part-time workers and the self-employed in the next round of AE developments. One change suggested is lowering the age threshold for AE from 22 to 18. It is also suggested that pensions contributions be calculated from the first pound earned, rather than from a lower earnings limit. However, it is not expected that these changes will be implemented until the mid-2020s.