Change in workplace contribution timetable receives mixed reaction as new tax year approaches

As the new tax year approaches, there are mixed feelings about a switch in timings over workplace pension contributions, says The Auto Enrolment Advisor.

A change in timetable announced by The Chancellor late last year brings contribution increases in line with the tax year. Now the first scheduled rise takes effect from April 2018, as opposed to the original date of October 2017.

Under the previous timetable, minimum contributions would have risen from 1% employer, 1% employee of qualifying earnings, to 2%/3% from October 2017 and to 3%/5% from October 2018. Now the first scheduled rise will take effect from April 2018 and end with a final increase from April 2019.

Critics have expressed concern about the cost of the 6-month postponement; the average cost in pension savings per person is estimated to be £770, based on the average UK salary. They also say it will add to the confusion that already surrounds the new auto enrolment rules, which require every business in the UK to enrol their employees in a Qualifying Workplace Pension Scheme.

Supporters of the delay say that aligning contributions with the tax year makes it easier for employees to plan their retirement savings for the year ahead, and easier for businesses forecasting costs for the tax year.

The Auto Enrolment Advisor’s Graham Robinson commented:

Despite the support in some quarters, it is hard to avoid the real reason behind this amendment: that the delay in the rise in contributions will save the Government an estimated £800 million in tax relief contributions.

“Rather than delaying the contributions timetable, a delay in some staging dates would have been better received, and allowed for more manageable staging of some of the country’s smaller sized businesses, rather than the ‘tsunami’ of small business auto enrolment we face in the next two years. This would have been welcomed by the pension providers, financial advisors and, most importantly, the employers alike.

For more on auto enrolment visit The Auto Enrolment Advisor at

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