Letter confirming pension contribution increase

Use our letter to advise workers of any increases in the minimum contributions that must be made to automatic enrolment workplace pension schemes.

Effective dates of increases

The minimum contributions that you and your workers must pay into your automatic enrolment workplace pension scheme increased in both April 2018 and April 2019. If you have staff in a workplace pension scheme, it’s your responsibility to make sure that at least the minimum amounts are being paid into it. There are currently no government plans though for the minimum contributions to be further increased, but this position may well change in the future. However, you won’t need to take any action if you’re already paying above any future increased minimum amounts. Additionally, if you’re using a defined benefits pension scheme then any increases don’t apply.

Minimum contributions

A total minimum amount of contributions must currently be paid into your pension scheme. You must make a minimum contribution towards this amount and your worker must effectively make up the difference. From 6 April 2019 onwards, the total minimum contribution is 8% of qualifying earnings and the employer’s minimum contribution is 3%. If you only pay this 3% minimum, it therefore means that the worker’s minimum contribution is 5%.

Implementation

Should these minimum contributions increase again in the future, make sure the way you calculate contributions and pay them into your pension scheme is ready to apply any such future increases. You should also let your staff know about any increases and this is where our Letter Confirming Pension Contribution Increase comes in. Our letter sets out details of both the total and employer minimum percentage contribution increases in relation to the latest 2019 changes and then it confirms what effect those increases have on the worker’s own percentage contribution. You can then adapt our letter to apply to any minimum contributions increases in future years. If any future mandatory increases happen in the middle of a pay period, which they normally will if your staff are paid monthly as they tend to take effect from the start of a new tax year, you must make sure the increased amount of contribution is implemented from the date it comes into effect, i.e. not from the start of the next pay period.