April 2019 Contribution Increase triggers enquiries
The next increase will happen on 6 April 2019 to a total of 8% of qualifying earnings of which 3% must be paid by the employer.
This triggered an interesting question from one of our member firms this week.
“What do you do with an employee that already has a stand-alone plan and we contribute to it but they do not wish to increase their contributions?”
We are talking here about someone that is quite happy with the existing “status quo” of contributions and the current plan they operate. What happens with the rate increase? Do they have to pay more?
According to the Pensions Regulator the solution is as follows:
If the employee and employer want to continue the current arrangement, even though it would be less than the new, mandatory AE contribution rates, they may do so…….
The key points here are:
So you can maintain a stand-alone pension plan for an employee outside of the qualifying workplace scheme with lower contributions but you must remember to re-enrol them every three years and the employer must be careful not to encourage, recommend or push such a thing, it has to come from the employee.