The statutory minimum contributions to auto enrolment pension schemes are increasing from April 2019.
All auto enrolment pension schemes must meet at least the statutory minimums by this date or they will no longer be a qualifying auto enrolment scheme.
|Date||7% of all earnings*||8% of pensionable salary, provided 85% of total payroll* is pensionable||9% of pensionable salary||9% of qualifying earnings|
|Total must be at least||Employer must contribute||Total must be at least||Employer must contribute||Total must be at least||Employer must contribute||Total must be at least||Employer must contribute|
|6 April 2018 to 5 April 2019||5%||2%||5%||2%||6%||3%||5%||2%|
|From 6 April 2019||7%||3%||8%||3%||9%||4%||8%||3%|
* Earnings must include everything that’s included in the definition of qualifying earnings
The government published a review announcing its intention to increase the State Pension age from 67 to 68 between 2037 and 2039, bringing it forward by seven years from its current legislated dates of between 2044 and 2046.
The government recognises the need to provide certainty and transparency for future pensioners. So employers might need to support older people who choose to work for longer and those who request to work flexibly. The State pension must be part of a wider package that encourages people to plan for their retirement, enables people to work for longer where they can and supports people who cannot work.
It's currently proposed that the normal minimum pension age (the earliest age a member might be able to take their pension savings) should increase from age 55 to age 57 in 2028. It would increase at the same rate as the increase in the State Pension age from then on.
This means that the minimum pension age would remain ten years below State Pension age. The change would apply to all pension schemes, with the exception of those in the public sector, that do not link their normal pension age to State Pension age.
At the beginning of 2018, the Department of Work and Pensions published proposals to change the way auto enrolment works. The government will consult on how to introduce the changes over the next few years with a view to introducing them in the mid-2020s. Reduction of the auto enrolment age will mean employers will have to enrol workers from age 18 instead of age 22.
The hope is that by saving longer in an auto enrolment scheme, workers will build up bigger pension pots. In addition, auto enrolment for administration will become simpler. Employers however might see an increase in their contribution costs, especially if their workforce is concentrated around younger ages as they’ll have to pay contributions for them if they don't already.
The lifetime allowance for the 2018/19 tax year is £1.03m. The lifetime allowance is set to increase in line with the consumer price index on 6 April 2019.
The lifetime allowance is the maximum benefits that can be built up in a registered pension scheme without being subject to a charge. If the benefits when they’re taken exceed the lifetime allowance, the difference between the two is subject to a charge. If the excess is taken as a lump sum, the charge will be 55%. If it’s taken as income, the charge will be 25%.
The new bands and rates for Scottish income taxpayers changed from 6 April 2018. An employee will be classed as a ‘Scottish taxpayer’ by HM Revenue and Customs (HMRC) if their main place of residence is in Scotland.
How much tax you pay depends on how much taxable income you earn. The table below shows the new Scottish tax bands and rates.
|Tax band name||Rate||Income range|
£11,850 - £13,850
|Basic rate||20%||£13,851 - £24,000|
|Intermediate rate*||21%||£24,001 - £43,430|
|Higher rate||41%||£43,431 - £150,000|
|Additional rate||46%||£150,001 - rest of income|
*New tax bands introduced for the 2018/19 tax year.
Have a look at our Pension Matters article on the new bands and rates for Scottish income taxpayers.
From 6 April 2019, if you live in Wales, some of your income tax will be paid to the Welsh government. The rates of income tax will be set by the Welsh government.
Income tax will continue to be collected by HMRC, but the Welsh government will be able to vary the rate paid by Welsh resident taxpayers. This means that people living in Wales could pay a different rate of income tax compared to people in other parts of the UK. Details of the proposed rates will be announced in the Welsh government’s budget.
On 25 May 2018, the new General Data Protection Regulation (GDPR) came into force. It aims to strengthen data protection for customers, giving them more control over their personal information.
Employers had to review the personal information they held on their employees and customers and make sure they had a genuine reason for processing personal information as well as reviewing and updating business materials and processes. We’ve pulled together a handy checklist to help employers take stock and review the actions that should have been taken.