Auto Enrolment and Workplace Pensions - Employee Vs Employer Contributions

Discussion in 'Employment & HR' started by Adrian2, Mar 13, 2019.

  1. Adrian2

    Adrian2 UKBF Newcomer Free Member

    23 1
    There are increases to the minimum contributions under Auto Enrollment that take effect from 6th April whereby the new minimum total contribution is 8%. Thus far and currently my company as employer pays both the min employer and employee percentages, as we like to look after our people; however this is now looking more costly as these contributions keep going up.

    What do most small business owners do? I am looking for views on what people consider normal, best practice, pros & cons etc. of the company picking up all or most of the total bill, vs splitting more evenly with employees.

    (We are a 4 employee micro business based in central London)
     
    Posted: Mar 13, 2019 By: Adrian2 Member since: Nov 12, 2018
    #1
  2. Mr D

    Mr D UKBF Legend Free Member

    16,191 1,804
    Wow, generous of you.
    My local garage the company pays its share and the staff have to pay their share. 8 staff business, 3 of them with pension payments via employer.
     
    Posted: Mar 13, 2019 By: Mr D Member since: Feb 12, 2017
    #2
  3. Adrian2

    Adrian2 UKBF Newcomer Free Member

    23 1
    Until now it didn't seem that generous because the monthly contributions started off at 1 or 2 percent, but with the minimum now going to 8% per month I might need to rethink things. So the second part of my question was what is 'normal' in terms of how SMEs are dividing the % contributions beween the firm and their employees..
     
    Posted: Mar 14, 2019 By: Adrian2 Member since: Nov 12, 2018
    #3
  4. Mr D

    Mr D UKBF Legend Free Member

    16,191 1,804
    If can pay 1 or 2 percent, is 3% too much?
    Perhaps give lower pay rise this year to cover the other employee costs associated with pension?
     
    Posted: Mar 14, 2019 By: Mr D Member since: Feb 12, 2017
    #4
  5. Newchodge

    Newchodge UKBF Big Shot Free Member

    12,464 3,236
    In my experience, SME's are not picking up the whole bill. For some, they believe their employees, faced with a 5% reduction in income, will opt out of the pension, thereby reducing the employer's costs.

    Some, although, I think, not many, see this as a cost of employing staff and recognise that lower paid employess cannot contribute at any level. Some object to paying their own contribution, let alone paying that of their employees.

    I would suggest it is something you need to discuss transparently with your staff. If you increase your payroll cost by another 3%, can you offer a payrise? Would staff prefer a payrise and to pay thier own increased contributions (actually leaving them worse off)?
     
    Posted: Mar 14, 2019 By: Newchodge Member since: Nov 8, 2012
    #5
  6. Mr D

    Mr D UKBF Legend Free Member

    16,191 1,804
    Come to think of it, is employer paying the pension for the employee a benefit in kind?
     
    Posted: Mar 14, 2019 By: Mr D Member since: Feb 12, 2017
    #6
  7. NicoJ

    NicoJ UKBF Regular Free Member

    115 15
    My experience (sme rather than any large companies) is the same as Cyndy, they pay the minimum they are required to do by law.

    The remainder is deducted from wages usually as salary sacrifice so employers ni is saved.

    Your employees are lucky that you are as generous as you are. Not sure that will help when you start taking any deductions though.
     
    Posted: Mar 14, 2019 By: NicoJ Member since: Mar 27, 2017
    #7
  8. Adrian2

    Adrian2 UKBF Newcomer Free Member

    23 1
    Thanks Cyndy, some useful ideas in there. My staff are all quite young and only one has any spousal or parental responsibilties. Remembering how little I cared about pensions when I was their age; you might be right that they would rather have more pay now instead of paying into a pension which - by the time they get there - won't pay out until they are 70!
     
    Posted: Mar 14, 2019 By: Adrian2 Member since: Nov 12, 2018
    #8
  9. Mr D

    Mr D UKBF Legend Free Member

    16,191 1,804
    An attitude shared by many over the decades.

    Spend now and let government support you rather than save now, have less to spend, and have more than government money to live on.
     
    Posted: Mar 14, 2019 By: Mr D Member since: Feb 12, 2017
    #9
  10. UKSBD

    UKSBD Not a real duck Staff Member

    9,243 1,731
    You have to be careful when discussing that it isn't seen as influencing them to opt out though.
     
    Posted: Mar 14, 2019 By: UKSBD Member since: Dec 30, 2005
    #10
  11. Adrian2

    Adrian2 UKBF Newcomer Free Member

    23 1
    Fear not - I have more diplomacy than Henry Kissinger ;-)
     
    Posted: Mar 14, 2019 By: Adrian2 Member since: Nov 12, 2018
    #11