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UPS minimum contribution rates change

The text below was sent to colleagues in March 2018

You may remember that we emailed you in summer and autumn 2017 to inform you of changes to the minimum contribution rates effective from 1 April 2018, as this will affect your take-home pay if you are contributing the current minimum 1% rate. If you are currently paying 2% or more then you will not see any change this April. These changes are necessary to ensure compliance with government legislation.

Please read on for an update.

To recap, the Heritage DC section of the University of Warwick Pension Scheme (‘UPS’) has a tiered contribution basis as set out below:

Contribution Rates Table    
Member Contribution (as a % of your Pensionable Earnings) Employer Contribution (as a % of your Pensionable Earnings) Total contribution payable to your Personal Retirement Account (as a % of your Pensionable Earnings)
1% 2% 3%
2% 4% 6%
3% 6% 9%
4% 8% 12%
5% 10% 15%

At the moment, if you do not make a decision on your contribution rate then the employer defaults you into paying the statutory minimum 1% rate, as permitted under current legislation. However, this minimum rate is now set to increase to 2%. When the legislation was originally passed, it was the intention of the government to increase the minimum contribution rates on 1 October 2017, and again on 1 October 2018.

However the government changed the dates when these minimum rates need to be phased in to the following Aprils.

You are reminded that your employer contributes more than the minimum required under legislation for members in the Heritage DC section of the UPS.

If you are currently paying the minimum 1% rate, your contribution rate will change as follows:

Date of change Employee rate Corresponding employer rate
1 April 2018 2% 4%
1 April 2019 3% 6%

What does this mean for me?

This means that if you are currently paying 1% then unless you elect otherwise your rates will change to 2% from 1 April 2018. If you are currently paying 2% then your contributions will not change until 1 April 2019 when they will increase to 3%.

If you wish to alter your contributions to 3% or more (as per the table above) please e-mail hr.pensions@warwick.ac.uk . Otherwise anyone paying 1% will pay 2% from April 2018.

We would like to remind staff that it is important to save into a pension scheme and that the more you save the higher the employer rate paid into your account will be, as outlined above.

If you have any queries, please e-mail hr.pensions@warwick.ac.uk