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What are the minimum contributions that must be paid into an Auto Enrolment Pension scheme?
The minimum contribution required for an auto enrolment pension scheme is based on “qualifying earnings”. Qualifying earnings are a band of earnings between £5,772 and up to £41,865. These figures are for the 2014/15 tax year and are expected to change each year.
Qualifying earnings include salary, wages, overtime, bonuses, commissions, statutory sick pay, statutory maternity pay, ordinary or additional statutory paternity
pay and statutory adoption pay.
Once the qualifying earnings amount has been identified a minimum contribution must be paid into the pension and these are shown in the table below. To allow employers to prepare for the costs of auto enrolment the minimum contributions are phased in as shown in the table.
|
Period/Qualifying Earnings |
Minimum EMPLOYER contribution |
Minimum TOTAL contribution (gross) |
Phase 1 |
Staging date – 30 Sept 2017 |
1% |
2% |
Phase 2 |
1 Oct 2017 – 30 Sept 2018 |
2% |
5% |
Phase 3 |
Oct 2018 onwards |
3% |
8% |
For some employers basing their contributions on band earnings will add extra complication to the payroll run and it may be more attractive to use alternative definitions of pensionable salary. Click here to find out more.
Apart from paying contributions, what does an employer need to do to meet auto enrolment requirements? Click here to find our more.
When does auto enrolment start for employers?
What does an employer need to do to meet auto enrolment requirements?
What are the three categories of worker and what are the employer duties for each category?
What are the minimum contributions that must be paid into an Auto Enrolment Pension scheme?
Do I have to use Qualifying Earnings as the definition of pensionable pay?
Can employers get help with Auto Enrolment?
Will my existing company pension plan meet the Auto Enrolment requirements?
Are there any penalties if an Employer fails to meet their Auto Enrolment duties?
