Minimum contributions to NEST

January 25, 2012 - Articles and technical, Steve Herbert - no comments

I refer to my post of this morning on the revised auto-enrolment staging dates for employers with less than 50 employees.

I made passing reference in that post to a delay that has also been announced (and confirmed today) with regard to the minimum pension contributions that employers can make in the early years of auto-enrolment.

I quote directly from the DWP’s documents issued today:

“We propose to delay from 1st October 2016 to 1st October 2017 the increase in the minimum rate of employer pension contributions from 1% to 2% of band earnings. Contributions will increase to 3% from 1st October 2018.”
Now it could be loose terminology, but the more I look at that statement above, the more it only highlights a delay to the employer contribution. Given this, I’m not really sure whether the delay also applies to the employee’s minimum contributions as well.

Either way, there will doubtless be an impact on the scheme certification test requirements as well, so this could be of significance for many employers.

Incidentally, I do realise that when I casually drop in phrases like ‘scheme certification’ that I am moving into pensions-nerd territory. The problem is that all of these subjects are becoming increasingly difficult to describe in lay terms. Anyway, for those that need to better understand what a certified scheme is, here is a link to a much earlier post of mine on this subject: https://www.jelfgroup.com/blog/2011/07/scheme-certification-tests/

Back to the point in question, there is clearly intended to now be a further smoothing of the minimum contributions, but it looks like we have yet another consultation delay before we know how this will impact on many employers.

I will of course keep you posted as new detail becomes available.

Best regards

Steve

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