Developments in Employee Benefits law and practice

25 February 2019

Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019  

These Regulations (SI 2019/262), effective 6 April 2019, give effect to the annual re-rating of various National Insurance contributions (NICs) rates, limits and thresholds for the purposes of calculating Class 1, Class 2, Class 3 and Class 4 NICs liability (or voluntary payment) for the tax year beginning 6 April 2019. 
Amendments are made to the Social Security Contributions and Benefits Act 1992 and corresponding provisions in the Social Security Contributions and Benefits (Northern Ireland) Act 1992, and the Social Security (Contributions) Regulations 2001, SI 2001/1004 to, among other things:

  • Increase the rate at which Class 2 National Insurance contributions (‘NICs’) are payable by self-employed earners, from £2.95 to £3.00 per week
  • Increases the small profits threshold, which is the minimum amount of profits chargeable to income tax that a self-employed earner must generate to incur liability to Class 2 NICs, from £6,205 to £6,365 per year
  • Increase the amount of a voluntary Class 3 NICs, from £14.65 to £15.00
  • Increase the lower and upper profits limits for Class 4 NICs between which Class 4 NICs are payable by the self-employed at the main Class 4 percentage rate. The lower limit increases from £8,424 to £8,632 per year and the upper limit from £46,350 to £50,000 per year
  • Increase a number of weekly earnings limits and thresholds for determining liability to Class 1 NICs and entitlement to associated state benefits: 
    • (i) the lower earnings limit, on or above which an earner gains access to certain state benefits, increases from £116 to £118; 
    • (ii) the upper earnings limit, above which primary Class 1 NICs are payable at the additional primary percentage, increases from £892 to £962; 
    • (iii) the primary threshold, above which primary Class 1 NICs are payable at the main primary percentage, increases from £162 to £166; 
    • (iv) the secondary threshold, above which secondary Class 1 NICs are payable, increases from £162 to £166; 
    • (v) the upper secondary threshold for the Under 21 age group, below which secondary Class 1 NICs are payable at zero-rate, increases from £892 to £962; and 
    • (vi) the upper secondary threshold for relevant apprentices, below which secondary Class 1 NICs are payable at a zero-rate, increases from £892 to £962
  • Increase the prescribed equivalents of the upper earnings limit, the primary threshold, the secondary threshold, and the upper secondary thresholds for the Under 21 age group and relevant apprentices specified, for monthly and yearly earnings periods

Actuarial assumptions for broad comparability assessments 

This note sets out the actuarial assumptions which are used by the Government Actuary’s Department (GAD) in carrying out broad comparability assessments under the Government’s Fair Deal policy.

TPR issues guidance on winding up a DC scheme

The Pensions Regulator has issued guidance which sets out the steps that trustees of defined contribution occupational pension schemes should follow when they are closing and winding up their scheme. The guidance covers – 

  1. Overview

  2. Decide whether the scheme should be wound up (stage 1)

  3. Prepare for and enter formal wind up of the scheme (stage 2)

  4. Securing members’ benefits (stage 3) 5. Completing the wind up process (stage 4)

Mid-Life MOT’ site launched

The Government has launched a new site that provides a package of support that gives individuals access to free, professional and independent guidance to help them with pension planning, working options and staying healthy.
Various links can be used to check where you are now with your money, work and health and see if your results fit in with what you want in the future.

PPF: Where we are at following Hampshire ruling

Since the Pension Protection Fund’s last update, in December, new court proceedings have started against the PPF, seeking to challenge, among other things, the PPF’s intended approach for calculating any increases due to their members as a result of the ruling in the Hampshire case.

By way of background, in November 2018, the PPF set out their plans for calculating and paying increases to members affected by the CJEU ruling. The ruling stated that pension scheme members should receive at least 50 per cent of the value of their accrued old age benefits if their employer became insolvent.

Latest TPR compliance and enforcement information

The Pensions Regulator has issued its latest Compliance and enforcement quarterly bulletin. This reveals that, in the last quarter of 2018, 30 mandatory penalty notices were issued in relation to failures to publish an annual chair's governance statement (totalling 422 in 2018) and no financial penalties were levied for failing to provide a scheme return in this quarter (194 were issued in 20180. TPR also obtained two production orders under section 345 of the Proceeds of Crime Act 2002 (with 16 issued in total in 2018).

The Regulator also provides examples of its intervention into scheme funding discussions, which led to several employers agreeing to a shorter recovery plan. 

Scottish Income Tax Rates approved

MSPs have voted to approve the Scottish Government's income tax plans for 2019/20. The rates and bands, unchanged from the announcement on 12 December 2018, can be viewed on the Scottish Government website


John W. Wilson LLB(Hons) FPMI ACII, Head of Research| Email: