30 Aug 2019
Payroll teams have played a key part in the governments focus to help the working population save enough towards their retirement, known as pension auto-enrolment. Over the last few years there has been a phased approach to auto-enrolling eligible employees into a pension scheme, and an annual increase of contribution rates from both employee and employer. April 2019 saw the final compulsory contribution increases to become a minimum of 5% from the employee and 3% from the employer.
Now that automatic contribution increases have ended, do employers need to be concerned about pension contributions?
The short answer is yes. An employer will still need to enrol eligible employees into their pension scheme when they join/as they become eligible. Businesses who employ a member of staff for the first time will also have a steep learning curve into the world of pension schemes. Unlike the original phased contribution rates, they will join at the current 8% total contribution.
That is the legal side of things, as per current legislation.
The other side of the coin is moral obligation. Although the working age population have made inroads to putting more aside for their retirement savings, figures shared by the Department of Work and Pensions (DWP) in 2017 found that 38% of the working age population still weren’t saving enough – that works out to be 12 million individuals. Employers will still need to consider how they can help their staff save for retirement. It could be in the way of education, helping staff to find independent financial advice, or perhaps incentivising good performance with additional pension contributions.
There’s no expert guide to follow at this stage so discuss with your staff what they would like to see and go from there.
If you’d like to discuss your payroll needs with our team, give them a call on 02380 234222 or email accountants@hjssolutions.co.uk
#NPW19 #KeepUKPaid #BePayroll