SCOTTISH business owners have been warned that action is needed immediately as a major change to pensions in April approaches quickly.

Mandatory pension contributions is set to increase by 3%, and according to leading accountants and business advisers French Duncan LLP, businesses need to make changes now.

From April 6, employers making the minimum 3% contribution must ensure employees make 5% in pension auto-enrolment contributions in order to meet the minimum 8% total contribution.

Currently, the existing provision is 2% for employers and 3% for staff.

Businesses operating PAYE payrolls are legally required to make the minimum contributions for their qualifying employees at the least.

Where employers cover the current minimum contribution requirement of 5%, staff are not required to make contributions.

Linda Kelly, head of payroll with French Duncan LLP, explained businesses will need to adjust their systems.

“For businesses paying monthly this is only two pay runs away so if companies have not implemented these changes they must do so straight away.”

But, Kelly added, not all increases apply to all businesses – so firms should check, either in their pension scheme documentation or by contacting their pension provider, to find out how they will be affected by the change.