Phasing

The minimum contribution levels paid into workplace pension schemes following a phasing path increased in April 2018

Phasing contribution increases to workplace pension schemes

By law, all auto enrolment workplace pension schemes must reach a minimum contribution level.

The first increases happened in April 2018 with a further increase planned so all schemes are making the minimum contributions by April 2019.

Many employers have chosen the statutory phasing timeline which means the first increase happened in April 2018, with a further planned increase as shown in the table below. 

Contribution basis
Date7% of all earnings*8% of pensionable salary, provided 85% of total payroll* is pensionable9% of pensionable salary8% of qualifying earnings
Total must be at leastEmployer must contributeTotal must be at leastEmployer must contributeTotal must be at leastEmployer must contributeTotal must be at leastEmployer must contribute
Staging date to 5 Apr 2018 2% 1% 2% 1% 3% 2% 2% 1%
6 Apr 2018 to 5 Apr 2019 5% 2% 5% 2% 6% 3% 5% 2%
6 Apr 2019 onwards 7% 3% 8% 3% 9% 4% 8% 3%

* Earnings must include everything that’s included in the definition of qualifying earnings.

Other employers have chosen a customised approach, following a different timeline and in some cases, different contribution increases too.

Earlier this year, we wrote to employers with schemes due to make a phasing increase to contributions within the first six months of 2018 – either statutory or customised.  

You’ll need to make the appropriate changes to your payroll system to ensure the new minimum contributions are in place to meet the effective date which applies to your scheme.  

If your scheme is an auto enrolment scheme, we’ll provide the information you need to help you with this through your employer dashboard. 

  1. We’ll create a payroll update file, updating the level of member and employer contributions for all members where the combined contribution is currently below the new minimum contribution levels. A task will appear on your employer dashboard when this file is ready - around five weeks before the increases are due.

    You’ll be able to view the changes that need to be made to contributions from the Update Payroll option on the homepage of the dashboard.

    If you’re following statutory phasing, an additional task will appear on your employer dashboard around the same time, reminding you that phasing increases are due soon. We’ll ask you to acknowledge you’ve seen this information. 

  2. You’ll then need to update your payroll system with the new contribution levels in the usual way and then submit the right contributions


If your scheme is a qualifying scheme,
you’ll need to update your payroll with the required contribution changes in the usual way.

If some or all of your members have opted for salary exchange to fund contributions, you’ll need to ensure the change to contribution levels is covered in the salary exchange agreements you have with these members.

We wrote to your scheme members to let them know this increase was coming. We also highlighted the benefits of saving for their retirement through your pension scheme. Here are examples of the letters we sent.


We’ve also created posters, postcards and an article template to help you to raise awareness of the change.

If you'd like hard copy posters or postcards please email us at Member.Communications@royallondon.com. Just let us know how many of each you need and confirm the address you’d like us to send them to.

To make sure all your scheme members knew what was happening, we also wrote to those who were already above the new minimum contributions, confirming there would be no change for them. 

The increase in contributions is a great opportunity for your members to save more, helping to build up their pension savings and giving them the chance of a better retirement. However investment returns are never guaranteed. So while your members' savings could grow, their value can also go down. This means they could get back less than what they put into their plan.

There may be some circumstances where a member may not want to pay the increased contribution.

The Pensions Regulator rules state very clearly that employers must not induce members to pay contributions below the minimum. However, you can agree to allow a member to pay contributions below the scheme default minimum.

If you agree these arrangements with a member, there are a few things you and the member need to be aware of.

  • You’ll need to have a way of recording that the member has chosen not to pay the increased contribution. 
  • You’ll need to update your payroll to reflect the contribution level you’ve agreed.
  • You’ll need to let us know that the member contribution won’t be increasing. Here’s the information we’ll need from you:

Plan number Title First name Last name Payroll ref no NI No.  Date of birth Agreed member contribution Employer contribution Include in future phasing (Y/N)
  • We'll assume that the member won’t be included in any future phasing increases unless you tell us otherwise.
  • You’ll also need to include details of those members who’ve chosen a lower contribution in the appropriate section of your scheme certificate.
  • Every three years, when your scheme goes through cyclical re-enrolment, the member contributions will be increased automatically to the scheme minimum. If the member still doesn’t want to make contributions at this level, they’ll need to inform you and you’ll need to make the necessary changes to payroll. 

We've prepared template wording which you can personalise and provide to any members in this position.

It’s important that your employees make their own decision about the level of contribution they want to make. You can find out more in The Pensions Regulator detailed guidance for employers.

Need more information?

You can find more information about phasing and your employer duties on The Pensions Regulator website.

If you have any further questions please get in touch.

The Royal London Mutual Insurance Society Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales number 99064. Registered office: 55 Gracechurch Street, London EC3V 0RL.