Pension auto-enrolment update
The pension auto-enrolment thresholds for 2017/18 have increased in line with national insurance contributions, although the auto-enrolment level itself is unchanged.
You can choose to opt in
Staff with annual earnings between £5,876 and £10,000 are not auto-enrolled, but can choose to opt in. Where annual earnings are over £10,000, staff aged between 22 and state pension age must be auto-enrolled into a pension scheme – with staff outside of this age range able to opt in.
For auto-enrolled staff and staff who have opted in, pension contributions must be paid on annual earnings between £5,876 and the upper level of £45,000.
|Right to opt in||£5,876||£490||£113|
Currently, the total minimum contribution is 2% of earnings, with a 1% minimum for employer contributions. But from 6 April 2018, the total minimum contributions will increase to 5%, with a 2% minimum for employers. The difference between the amount of employer contribution and the total minimum contribution is made up by staff contributions.
Both the employer and staff can contribute greater percentages if they wish, and higher employer contributions will reduce the shortfall that needs to be covered by staff contributions.
To discuss this article in more detail, or to discuss any wider tax planning, please talk to us.
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