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The minimum contributions that employers and employees pay into automatic enrolment schemes will increase in April 2018.
If you have not fully considered the financial implications of the increase in auto-enrolment contributions for your employees, you should build this cost into your budget now.
It would also be wise to communicate the financial impact of the imminent contribution rate increase to your employees, before they see the change on their payslip.
While there are no legislative duties under auto-enrolment compelling employers to notify employees of the contribution increases, we would recommend that all companies pro-actively communicate with their workforce, not least because it will help to reduce employee queries.
One area where HR and Payroll departments will need to take particular care is with ‘contractual enrolment’ where employees have joined a pension scheme as part of their conditions of employment (which would clearly set out in the employment contract that pension contributions will be deducted from salary).
If the authority to deduct pension contributions did not make reference to the phasing of minimum contributions in 2018 and beyond, additional specific employee consent to the increased deduction may be required.