Employee Pensions (April 2019 onwards)

The Government increased the minimum pension contributions that must be paid in to your workplace pension scheme from April 2019.

So what changed in 2018 to 2019? The Total Minimum Contribution increased to 8%. These contribution rates apply to most employees. They will apply to band earnings, which are earnings between £6,136 and £50,000.

The employer must pay part of the total minimum contribution. You pay the difference between the total minimum contribution and the amount your employer contributes. Where you contribute, the Government can top up your contribution. In the examples below, we have assumed your employer chooses to pay the minimum employer contribution, and that you are eligible for basic rate tax relief on your contribution. However, please speak to your employer for the contribution rates that will apply to you.

Your Employer PaysYou PayGovernment Pays*
From April ’193%4%1%

*The Government contribution is in the form of basic rate tax relief, currently at 20%.

So, from April 2019, you are only paying half of the overall contribution with the other half coming from your employer and the Government. The Government contribution is in the form of basic rate tax relief, currently at 20%.

Most workers in the UK, including those operating via an umbrella company, are automatically enrolled into a workplace pension scheme by their employer. From the date their automatically enrolled they have a month to ‘opt-out’. If they do nothing they’ll be enrolled in the scheme. They’ll make contributions to their retirement pot from their pay for as long as they’re employed or until they take their money out.

Workers and employers can both contribute into the pension to build a retirement pot that’s invested on behalf of the worker. Workers who earn over a certain amount are entitled to a minimum contribution into their pot when they’re paid.