Updating BRIGHTPAY with the new minimum pension contributions from 6th April 2018
THE LEGISLATION
Employers are responsible for ensuring that any pension contributions deducted from earnings after 6th April 2018 are at least equal to the minimum amounts laid down by the legislation.
BRIGHTPAY
As you would expect with the most user friendly payroll software packages for automatic enrolment, most of the changes will be automated.
- If 1% employer and 1% employee is currently being contributed to an employee’s pension pot, BrightPay will automatically uplift these workplace pension contributions to the minimum 2% employer and 3% employee from 6th April 2018, with no action required in BrightPay by the employer.
- The employer and employee may have decided to contribute the increased contributions from the duties start date (previously known as the staging date), instead of from the phased date. For example, they may already be contributing 2% employer and 3% employee. In this instance, no action is required and the contributions will continue as normal.
- There is also the scenario whereby more than the current minimum contributions but less than the 2018/19 minimum contributions is being contributed to the employee’s pension pot, e.g. 2% employer and 2% employee. In this instance, on 6th April 2018 BrightPay payroll will alert the employer that contributions are below the minimum and that it must be ‘fixed’. Employer’s will have the option to increase the contributions to be in line with the 2018/19 minimum pension contributions (in this example to 2% employer and 3% employee) or to increase the employer pension contribution, whereby the employer will be liable to pay the difference (in this example to 3% employer and 2% employee).
There may also be the scenario whereby contribution rates are calculated by a fixed amount rather than on a percentage basis. In this instance, BrightPay will automatically detect if this fixed amount falls below the minimum pension requirements, with an alert for the employer to fix this as required.