contributions increaseI know I have mentioned it previously but I wanted to make sure you knew to inform any clients you have that minimum contributions increase from 06/04/2018 to 3% for employees and 2% for employers.


These increases are the new legal minimum payments that all employers are required to apply to their employee’s pensions. The previous minimum was 1% for employees and 1% employers.


The Pensions Regulator (TPR) will have already communicated these increases to employers but it might be worth checking that employers are communicating these changes to their employees.  The rises are part of a phased increase and there will be another increase in April 2019 (5% employees 3% employers) and after this the percentages will be reviewed annually by the Government.

Auto Enrolment is the sole responsibility of the employer and not anybody else. TPR will oversee employer compliance and fines will be issued to employers who are not compliant.

The penalties can be quite severe and may be implemented as below:

  • An initial formal notice will be issued.
  • £400 fixed penalty issued.
  • An escalating penalty, charged daily, will then be applied if the employer is still not compliant. For a company with 5-49 employees the daily rate is at £500 per day…very expensive!

As you can see there is a potential for non-compliance to become extremely costly for small companies.  Employees will still be able to opt-out/cease membership of a scheme if they wish, but an employer must not encourage or try to persuade their staff to do this.

These contributions increase are as well as the National Minimum/Living Wage increases which are to be implemented from 1st April 2018. The new rates of pay increases are displayed below:


Year 25 and Over 21 to 24 18 to 20 Under 18 Apprentice
April 2017 £7.50 £7.05 £5.60 £4.05 £3.50
April 2018 £7.83 £7.38 £5.90 £4.20 £3.70


Employers should ensure that these increases are implemented.