The Chartered Institute of Payroll Professionals ……………………………………………………………Policy News Journal
Your clients may have agreed with their scheme provider to calculate minimum contributions in a different way.
For example, if your clients have used certification to allow an existing scheme to be used for automatic enrolment, then it's possible that the certification period may include one or both of the increases in the minimum contribution levels. If this is the case you will need to apply different increases. More information about this is on The Pensions Regulator’s website. If your clients are unsure they should check their scheme rules, and speak to their pension provider if they need extra help with this. What will my client need to do? Your client can choose to pay the full amount of the total minimum contribution. This may mean staff do not have to pay in at all, unless the scheme's rules say that they have to make contributions. Both your client and their staff can choose to contribute more than the minimum amounts to the pension if they want to. Supporting your clients with the increases The increase in minimum contributions should be simple to do, but your clients need to start thinking about the increases early, and plan ahead for when they come into effect in April 2018 and April 2019. It’s possible that your clients may have been planning to make the increases from October 2017, as this was the original date for the first phase of the increases. However this date was changed by the government to start from 6 April 2018. If your clients would still like to make the increase from this date, they can. They should speak to their pension and payroll providers to find out how to do this. It’s important that their workplace pension schemes and payroll software are able to support the contribution increases by 6 April 2018, otherwise the schemes used by your clients may no longer qualify for automatic enrolment, and the right contributions might not be deducted at the right time. Pension schemes should already be making necessary changes to support the increases, and will communicate this, but it's still your client's responsibility to make sure they're using a qualifying scheme, and that the right amount of pension contributions are deducted. If your client’s chosen pension scheme does not support the increases, then your clients will need to talk to them about their options. While there is no legal requirement for your clients to write to their staff, this is something they may want to consider doing to help minimise queries, or reduce the number of workers who decide to leave their schemes as a result of the increases. Your client’s pension scheme should be able to help with this. Pro-rated contributions It's possible that the increases will take place part way through a worker's pay period. For example, your client could have a pay period of 1 to 30 April, with the increases effective from 6 April. In these circumstances, the contribution for the pay reference period up to 6 April would be calculated based on the old rates, and from 6 April up to the end of the pay reference period being based on the new rates. If your client pays in more than their legal minimum contribution, but less than the total minimum contribution shown in the table, then their staff will need to pay in at least enough to make up the shortfall between these amounts.
If your client's payroll does not process pro-rated contributions, they should talk to the pension provider and payroll provider, and agree how best to deduct the amount due.
Further information Guidance for business advisers: www.tpr.gov.uk/phase Guidance for employers: www.tpr.gov.uk/increase
For information relating to specific scheme rules, contact the pension scheme provider.”
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Auto enrolment for the self-employed and gig economy? 9 March 2017
As part of the automatic enrolment review , the Work and Pensions Select Committee has received proposals to help the self-employed save for retirement.
The Chartered Institute of Payroll Professionals
Policy News Journal
cipp.org.uk
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