From 6 April 2018 the level of minimum contributions which must be paid into a qualifying pension scheme under auto-enrolment went up to 5% of qualifying earnings, of which employers must make a minimum contribution of at least 2%, with employees contributing the balance. Prior to 1 April 2018, the minimum contribution was 2%, of which employers were required to contribute a minimum of 1%. Employers should ensure that they are meeting the new minimum contribution requirements, and advise employees of the increase in their contributions from 1% to 3%.
The pension annual allowance remains unchanged at £40,000 for 2018/19. Unused allowances can be carried forward for up to three years. However, as previously, the annual allowance is reduced where income excluding pension contributions is £110,000 or more and income including pension contributions is £150,000 or more. Where this is the case, the annual allowance is reduced by £1 for every £2 by which income exceeds the £150,000 limit until the minimum allowance of £10,000 is reached. Consequently, anyone who has income of £210,000 or more (inclusive of pension contributions) for 2018/19 will only receive the minimum allowance of £10,000.
For 2018/19 the money purchase annual allowance remains at £4,000.
The lifetime allowance is increased in line with inflation to £1,030,000 for 2018/19.
Contact us on 01275 852255 to discuss your obligations under auto-enrolment and your retirement planning options.