From 6th April 2018 employers and employees will see a rise in the pension contributions that they make on a monthly basis. This increase will also impact contractors and the umbrella companies with whom they work, as long as they haven’t chosen to opt-out of the scheme. Below we outline what a workplace pension scheme entails and contributions that employers and employees should be putting into the scheme each month.
What is a workplace pension?
Auto-enrolment workplace pensions began rolling out to businesses in October 2012, with businesses across the UK having a specific staging date in which to implement an appropriate scheme for their eligible employees. The purpose of these pensions is to ensure that when it comes to retiring, people have an adequate amount saved so that they are not solely reliant on the state pension.
Schemes are established so that both employers and employees will contribute to a business’ chosen pension provider, with minimum contributions rising year on year until April 2019. For those employees that wish to save into their own pension fund, they are able to opt-out of their employer’s scheme.
Increase in pension contributions
Currently, the minimum contributions for employers (umbrella companies) and employees (contractors) stands at 1% each, totalling 2% per month. The rise in these contributions are as follows:
From 6th April 2018
Employer (umbrella company) contribution – 2%
Employee (contractor) contribution – 3%
Total – 5%
From 6th April 2019
Employer (umbrella company) contribution – 3%
Employee (contractor) contribution – 5%
Total – 8%
Exchequer Solutions & NEST
As a fully compliant umbrella company, it is Exchequer’s legal duty to ensure our pension scheme reflects the rise in pension contributions from April 2018. Our chosen pension provider, NEST, ensures that umbrella contractors contribute to a high-quality scheme that has been designed specifically for workplace pensions. Contractors that have been under Exchequer’s Umbrella scheme for three months or more will automatically be opted to Exchequer’s pension scheme, provided that they have not chosen to opt-out.