Auto-enrolment contributions for staff: How much should you pay?

14 December, 2016

The Government’s auto-enrolment legislation is confusing enough as it stands – but how does it work for staff with irregular hours or varying pay?

The Pensions Regulator (TPR) has said, in situations such as these, the pension contributions that both you and your staff make towards a qualifying pension scheme must rise and fall in relation to the amount that employees are earning.

Under certain circumstances, both employer and employee will be exempt from paying any contributions at all. This will only apply below an individual income threshold of £192 per week, or £833 per month (for workers aged between 22 and the state pension age).

However, in most cases, any irregular staff must be placed onto a qualifying pension scheme. From there, you as an employer will need to keep track of their earnings in order to adjust contributions where appropriate.

To work out exactly how much should be paid, you can follow this table:

The employer pays: Employee pays: The Government adds tax relief of: Total contribution:
1.0% of employee’s qualifying earnings until 6 April 2018 rising to 2.0% until 6 April 2019 then rising to 3.0% 0.8% of employee’s qualifying earnings until 6 April 2018 rising to 2.4% until 6 April 2019 then rising to 4.0% 0.2% of employee’s qualifying earnings until 6 April 2018 rising to 0.6% until 6 April 2019 then rising to 1.0% 2.0% of employee’s qualifying earnings until 6 April 2018 rising to 5.0% until 6 April 2019 then rising to 8.0%

At Watson Buckle, our payroll team can manage all of the necessary changes to your payroll so that your employees’ pay is correctly adjusted. We can also offer advice and support relating to all aspects of auto-enrolment. For more information about our payroll services, please contact us.