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Do you run a business that employs people?

If so, did you know that changes to auto-enrolment rules may soon increase costs for you and your employees?

What is changing?

  • The minimum age for enrolment will fall from 22 to 18 to encourage young workers to start saving for retirement.

 

When do the new rules come into force?

The government is consulting business groups about how the changes will be implemented and they are likely to be phased in.

 

What are the implications and what can you do?

  • Removing the lower earnings limit will increase costs for employers and members if contributions are based on qualifying earnings.
  • £499.20 more will be paid into each member’s pension each year, of which:
    employers will have to pay in £187.20
    employees will have to pay in £312 more a year, although with income tax relief this will fall to £249.60 for basic rate tax payers and £187.20 for higher rate taxpayers.
  • The cost can be lower for employees who use salary exchange/sacrifice.

 

MKC Corporate can help employers:

  • plan now both for the higher employer contributions and by notifying employees of how the changes will affect them.
  • review their definition of pensionable earnings to see if Qualifying Earnings is still the most appropriate for their workforce.
  • understand how using salary exchange/sacrifice could benefit both the employer and employees.
  • ensure that pension schemes remain compliant with all the requirements of Workplace Pension legislation including cyclical re-enrolment, regular certification of pensionable earnings definition and re-declaration of compliance to The Pensions Regulator.

 

To find out more, please contact the MKC Corporate team on corporate@mckwealth.co.uk  or call us on 0161 529 8070.

 

20 September 2023

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