th April 2018, with a further increase on 6^th April 2019. From 6^th April 2018 employers will need to contribute a minimum of 2% of employees’ qualifying earnings and employees’ will need to contribute 2.4% (equivalent to 3% with tax relief). This will mean that, with tax relief, pension contributions will total 5% of an employee’s qualifying earnings. Why Are Contributions Rising? The government has calculated that millions of people are not saving enough for their retirement. Life expectancy is going up, but people are saving less. So, the government introduced the workplace pension scheme to encourage people to increase savings towards their retirement. The minimum total contribution to the scheme is based on an employee’s ‘qualifying earnings’. These are employee earnings (before income tax and National Insurance contributions are deducted) that fall between a lower and upper limit set by the government. The table below sets out the minimum total contributions set by the government as a percentage of qualifying earnings:

Date:	Employer pays:	Employee pays:	Government adds tax relief of:	Total contribution
Up to 5 April 2018	1%	0.8%	0.2%	2%
From 6 April 2018	2%	2.4%	0.6%	5%
From 6 April 2019	3%	4%	1.0%	8%

  What Do You Need to Do as An Employer? As an employer your payroll system should automatically be updated at the year end to reflect the increase, but it is worth checking with your software provider that this is the case. Employees will have been informed of these increases when they were first enrolled into the pension scheme. However, as a matter of courtesy and to alleviate any unnecessary queries over increased contributions it may well be worth sending out a reminder. It is also worth bearing in mind that the increased employee contributions may cause problems to some of your employees.  What Do You Need to Do as An Employee? As an employee the increased contributions will be taken automatically from your wages, so you will not have to take any further action. If you have already chosen to pay more than the minimum contributions, and your payments are greater than the increased minimum levels, you will not need to increase your contributions unless you wish to do so.   The S4B Team We are a team of Profit Consultants and Chartered Accountants who work with you to help ensure your success. Send an email to [email protected] or call 01628 623444 to see how we can help you.