The minimum amounts that must be contributed to pension schemes under the auto-enrolment rules are scheduled to increase over the next three years. At present, the total minimum contribution is 2%, of which a minimum of 1% must be made up of employer contributions. These limits were set to increase on 1 October 2017 to 5% and 2%, respectively, before rising to 8% and 3% with effect from 1 October 2018.
The Chancellor announced that the changes to the minimum contribution rates under auto-enrolment would be deferred for six months each, so that they are aligned with the tax year – the increase to 5% will be deferred until April 2018 and the increase to 8% will be deferred until April 2019.
The proposed changes to the dates on which contributions will increase was badged as a simplifying measure for businesses, which would reduce the administrative complexity of the changes. The change will result in a potential cost saving for employers, who will defer the increase in their minimum contributions for six months.
For individuals, the impact of the change is likely to be relatively minor, as they will retain the ability to make contributions higher than the statutory minimum.