What Are Employer Pension Contributions?
Please note this blog post was published over 12 months ago and so may not include the most up-to-date information, for example where regulation around investing has changed.

What are Auto Enrolment Pensions?
Auto Enrolment Pensions take a small percentage of an employee’s monthly earnings along with contributions from their employer and the government in the form of tax relief, to help the individual build a pot of money that they can live off in retirement.
To ensure people don’t miss out on the benefits of a Workplace Pension, employers are required to automatically enrol their employees if:
- they’re employed within the UK,
- they earn over £10,000 (that’s £833 per month or £192 per week); and
- they’re aged between 22 and State Pension age.
If employees don’t fit these criteria, they may still be able to join the Pension scheme by opting in through their employer.
What are employer Pension Contributions?
Employer Pension contributions are amounts of money paid by companies towards their employees’ Pension fund. The contribution size depends on how much the employee earns between the qualifying thresholds and the employer Pension rate, as set by the government.
Employers are currently required to pay a minimum contribution of 2% of each employee’s earnings between £6,032 and £46,350. From April 6th, 2019, employers will be required to pay at least a 3% contribution on each employee’s earning between £6,136 and £50,000.

Why do Pension contributions matter to employers?
Auto Enrolment Pensions are a continuing responsibility for all employers. With the rates set to increase from the 6th of April, it’s crucial that all companies are aware of the changes and are ready to contribute more towards their employee’s retirement funds.
The penalties facing employers who don’t adhere to the new employer contribution rates could be severe. The Pension Regulator can impose fines ranging from a flat £400, £50 a day up to £10,000 a day and even imprisonment for up to two years.
Auto Enrolment Pensions and employer contributions aim to help individuals reach their savings goals and secure a comfortable retirement.
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