For the 2017/18 tax year they were set at 1% employer, 1% employee. The minimum contributions that employees and employers must pay by law has increased from April 2018 and this means that your employees will pay 3% of their pay and you (the employer) will pay 2%.
How much extra will this cost me?
Probably not as much as you think as the contributions may not be calculated on the whole of your pay and the Government will give you tax relief on any contribution you pay. So, as a very rough guide, your monthly earnings will reduce by:
|Annual Pay||Current Deduction||Tax savings||April Deduction||Tax savings||Increase Of||Employer Contribution||Pension fund will receive|
The figures are based on The Pensions Regulator’s employer contributions calculator.
What if I can’t afford the extra?
It is possible to opt out of this pension arrangement, but you should bear in mind that this means that you may not get the benefit of your current Pension Provider’s or the Government’s contributions towards your future
Will the contribution rates increase again?
There is a further increase due to take place from April 2019, when your contribution rate will go to 5% of pay and the company’s contribution will increase to 3%.
What if I am already paying more than this?
These are minimum contribution rates and if you are already paying more than this, your contributions will not change unless you inform your Pension Provider and your employer