Xafinity Punter Southall, the largest pure pensions consultancy in the UK specialising in pensions actuarial, investment consulting and administration services, are asking if pension schemes are prepared for the forthcoming changes to automatic enrolment requirements.
- Minimum payments will increase from 6 April 2018 and again in 2019
- The change is an employer responsibility
- Salary sacrifice, flexible benefits or contractual enrolment could complicate matters
- Check your pension scheme is still fit for purpose
- Ensure your employees understand and value their pension
Automatic enrolment is not just about paying the right contributions, pension schemes need to ensure they have appropriately communicated with their employees and that the scheme remains fit for purpose. Since the introduction of automatic enrolment, there have been many changes in pension legislation, not least greater freedom in how people can use their retirement savings. It’s worth considering how well your pension scheme has kept pace with these changes and whether it still meets the employee’s needs.
Ken Anderson, Head of DC Solutions at Xafinity Punter Southall said: “Many employers will have been made aware of the increase in minimum contributions into an employee’s automatic enrolment pension to 2% from 6 April 2018 and again to 3% in April 2019, but this is not all they need to be aware of.
The definition of earnings will have an impact on the minimum contribution increases, depending on which definition the employer choses to use. The majority use a statutory definition of ‘earnings’ which are ‘band earnings’. These include salary, wages, commission, bonuses and overtime. Other employers choose a different definition of earnings such as ‘gross earnings’, ‘at least 85% of total earnings’ and ‘all earning’, each varying the minimum payment increases.”
