Thought / 24 Jan 2018

AE Contribution Phasing - Are You Ready?

The overall picture

With a little careful planning, the minimum contribution increases in April 2018 do not have to be a painful exercise.  In some cases, employers have chosen to set their employer contribution at a higher level meaning employees do not need to increase their own contributions.

However, in many low margin industries, it is just not possible for employers to shoulder the whole cost and so the employees will have bear the minimum increases. Working with our clients, we have done some analysis on the impact to both the company and individuals to help them develop the most attractive and affordable strategy possible.

After analysis

In addition to the costs involved, some employers will need to work on their administration processes to ensure the correct amounts are collected. Questions around whether payroll have to make the adjustments and when the new contributions will start from all need to be dealt with as part of the phasing process.

Booklets, websites and other internal communications need to be updated and in larger organisations there may be a number of different payrolls to co-ordinate.

Finally, a clear communication strategy can reduce the pain to member and help them understand the positive impact on their retirement plans.

Sue Pemberton

Head of Employer Services

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