Auto enrolment minimum contributions
18 February 2015, Auto Enrolment, Charities, Companies, Employer, Sole Traders
Employer and employee contributions
From an employer’s staging date, they are required to provide a pension scheme and monitor the pay of workers according to thresholds set by legislation.
Employer contributions of 1%, rising to 3% must be paid into a pension scheme on earnings between the lower level of qualifying earnings and the upper level of qualifying earnings. The first table below shows the auto enrolment minimum contributions for both the employer and employee. The employer can opt to pay the total contributions if it chooses, but in most cases the employee will have their deduction made automatically from their pay.
Pension contributions as a percentage of qualifying earnings
| Date | Employer minimum | Employee minimum / Employer additional | Total |
|---|---|---|---|
| Employer's staging date to 5 April 2018 | 1% | 1% | 2% |
| 6 April 2016 to 5 April 2019 | 2% | 3% | 5% |
| 6 April 2019 onwards | 3% | 5% | 8% |
The Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2015 draft legislation set out the proposed thresholds for qualifying earnings in 2015/16. Anyone above the lower threshold has a right to auto enrolment minimum contributions of 8% including a 5% employee contribution based on qualifying earnings. This means your employer must pay a contribution of at least 3% if you remain in the scheme.
Qualifying Earnings Thresholds for Auto-Enrolment
| 2021 - 2022 | Annual | 1 week | Fortnight | 4 weeks | 1 month | 1 quarter | Bi-annual |
|---|---|---|---|---|---|---|---|
| Lower level of qualifying earnings | £6,240 | £120 | £240 | £480 | £520 | £1,560 | £3,120 |
| Earnings trigger for automatic enrolment | £10,000 | £192 | £384 | £768 | £833 | £2,499 | £4,998 |
| Upper level of qualifying earnings | £50,270 | £967 | £1,934 | £3,867 | £4,189 | £12,568 | £25,135 |
Qualifying Earnings Thresholds for Auto-Enrolment 2020-21
| 2020-21 | Annual | 1 week | Fortnight | 4 weeks | 1 month | 1 quarter | Bi-annual |
|---|---|---|---|---|---|---|---|
| Lower level of qualifying earnings | £6,240 | £120 | £240 | £480 | £520 | £1,560 | £3,120 |
| Earnings trigger for automatic enrolment | £10,000 | £192 | £384 | £768 | £833 | £2,499 | £4,998 |
| Upper level of qualifying earnings | £50,000 | £962 | £1,9244 | £3,847 | £4,167 | £12,500 | £25,000 |
Alterledger can manage your auto-enrolment process
You will need to assess your workforce every pay period, with severe penalties if you fail to act properly. This can be a complicated process and should be managed together with your general payroll procedures. Alterledger can deal with all your payroll and auto-enrolment needs and save you time and money to spend on your own business. Please get in touch using the form below for more information.
