A u t o E n r o l m e n t f o r A c c o u n t a n t s & B u r e a u x

• Work Place Pensions• Auto Enrolment

• The Pensions Regulator• Pension Providers

• Auto Enrolment Functionality in QTAC Payroll• Your Role

• Planning for Success

Please use these slides to help understand the following concepts:

This webinar is for accountants and bureaux who have clients that are legally required to set up a pension schemes and contribute to it in the near future. It provides some considerations on how you can help your clients take actions that are in the best interests of both their business and their workers.

C o n t e n t s o f W e b i n a r 1. What is Auto Enrolment2. Auto Enrolment so far 3. Contributions4. Key Terms5. Q & A’s6. The Pensions Regulator7. Pension Providers8. How can QTAC Payroll help9. Postponement10. Your Role 11. Staging Volumes 12. Creating a service 13. AE Road Map14. 7 Key Steps to Success15. Q&A’s

W h a t i s A u t o E n r o l m e n t

• ‘Workplace Pension Reform’ is the term used to describe the changes to pensions in the UK, where employees are automatically enrolled into an ‘Automatic Enrolment’ pension scheme, as long as they ‘qualify’.

• A workplace pension, which is arranged by the employer, is a way for employees to save for retirement. Some workplace pensions are also called ‘occupational’, ‘works’, ‘company’ or ‘work-based’ pensions.

• If a company already has a pension scheme they will need to check that it ‘qualifies’ if their plan is to use that scheme as their ‘Workplace Pension’.

• Companies who do not currently have a pension scheme setup will need to set up an ‘Auto Enrolment’ scheme. The pension scheme must ‘qualify’ - meaning the employee and employer contributions match or exceed the minimum contributions (detailed later in this document) and also that no restrictions are placed on membership.

• Every company will be required to offer employees the chance to join a pension scheme, which both the ‘employee’ and ‘employer’ will contribute in to. The employer has to contribute at least the minimum contribution into the scheme in order for the scheme to qualify.

• In most cases the government also add money into the pension scheme in the form of tax relief.

A b o u t A u t o E n r o l m e n t

• Employees need to be automatically enrolled if they:

Are aged between 22 and State Pension Age Earn more than £9440 a year (2013/14 limit) Work in the UK

• If a company does not have a qualifying pension scheme then it must introduce one. If the employer doesn’t currently make a contribution to the pension, they will have to by law when they ‘automatically enrol’ entitled workers.

• Your clients are responsible for ensuring they have a compliant pension scheme in place and that the correct employees and employers contributions are paid into the scheme.

• What’s the reason for auto enrolment? The average life span has increased and people are living a lot longer. These changes to pensions are because the current state pension will just not be sufficient when retiring and therefore trying to encourage people to save for retirement.

Summary1901 – 10 Workers for every 1 Pensioner2010 – 3 Workers for every 1 Pensioner2050 – 2 Workers for every 1 Pensioner

J o b h o l d e r s d e fi n i ti o n

Eligible jobholder

The employer must• automatically enrol and make contributions• if using postponement, provide a notification to the eligible jobholder• process any opt-out notice• automatically re-enrol approximately every three years• keep records of the automatic enrolment process

Non-eligible jobholder

The employer must• arrange pension scheme membership if the non-eligible jobholder decides to opt-in, and also make contributions• provide information about the right to opt-in, unless using postponement• if using postponement, the employer must provide a notification to the non-eligible jobholder• process any opt-out notice• keep records of the enrolment process

Entitled worker The employer must: • arrange pension scheme membership if the entitled worker decides to join• provide information about the right to join, unless using postponement• if using postponement, provide a notification to the entitled worker• keep records of the joining process

J o b h o l d e r s c o n ti n u e d

A u t o E n r o l m e n t s o f a r

One Year in into the Pension Reform

• More than 750,000 members

• Over 2,350 employers

• Opt outs around 8 per cent

Feedback that we are hearing

• Be prepared

• Demand for standardised payroll-centric solutions

C o n t r i b u ti o n s • Contributions are the amount both the employee and employer will contribute to the employee

pension pot. For many companies this may involve an increased cost for each employee enrolled into the pension.

• Below is the proposed contribution period:

**These percentages and dates could be subject to change.

++ If the employee pays income tax, the government will add money to the pension in the form of tax relief.

The tax relief will be shown differently depending on the pension type being used – either a ‘Net Pay Agreement’ (NPA) or a ‘Relief at Source’ (RAS). If running an ‘NPA’ pension, the employee will see a 1% deduction on their payslip. Running a ‘RAS’ pension, the employee will see the 0.8% on the payslip and the 0.2% tax relief is added by the government.

• Note that these contributions are based on the bare minimum employer contributions, so that as long as the ‘Minimum Contributions’ are met, the contributions being taken are enough. For example, the minimum employer contribution up to October 2017 is 1% and the minimum total contributions are 2%, this means the employer can choose to contribute the whole 2% and the employee to contribute 0%.

K e y Te r m s • ‘Auto Enrolment’

This is the term used to describe the changes to pensions, where employers will automatically enrol eligible jobholders into a pension scheme.

• ‘Workplace Pensions’ This is where employees can be automatically enrolled into a pension scheme. This is the pension scheme setup for your retirement that’s arranged by the employer. Both the employee and employer can contribute, though the employer must contribute for it to qualify as an auto enrolment pension scheme.

• ‘Staging Date’This would be the date by which companies should start enrolling those eligible into a qualifying pension scheme.

• ‘Postponement’Postponement is the postponement of employees assessment which can be up to 3 months after a companies staging date. Postponement reduces the risk of difficult pro-rated calculations and problems relating to refunding of contributions due to people opting out in a different tax year to the one in which deductions were made.

K e y Te r m s • ‘Qualifying Earnings’

These are earnings used to identify if an employee is an eligible or non-eligible jobholder or an entitled worker. Qualifying earnings include: basic pay, wages, salary, bonuses, overtime, commission and any maternity/paternity/adoption/sick pay.

• ‘Contributions’These are what both the employee and employer will contribute into the employees’ pension pot.

• ‘Opt Out’Employees who have been automatically enrolled can choose to opt out if they wish. Employees have a 6 week window after being auto-enrolled as member of Auto Enrolment Pension Scheme during which they can opt-out. If they do so in this time then any employees and employers contributions deducted are refunded by the Pension Provider.

• ‘Opt In’Certain employees, who don’t earn enough to be automatically enrolled, but do have qualifying earnings greater than the lower limit, can choose to opt in to the pension unless they are already an active member of a qualifying pension scheme.

K e y Te r m s

As shown in the ‘Contributions’ slide earlier, with auto enrolment pensions, if the employee pays income tax, thegovernment will add money to the pension in the form of tax relief. The tax relief will be shown differently dependingon the pension type being used – either a ‘Net Pay Agreement’ or a ‘Relief at Source’.

• ‘Net Pay Agreement’ Using a Net Pay Agreement pension the employee’s contribution reduces the taxable gross pay and hence the employee receives the tax relief at the payroll end by paying less tax.

• ‘Relief at Source’Using a Relief at Source pension, an amount of tax relief is added by the government at the pension providers end.

• ‘The Pensions Regulator’They are the UK regulator of work-based pensions. They are responsible for auditing companies ensuring that employers are compliant with auto enrolment.

• ‘NEST’The National Employment Savings Trust is a pension provider available to all employers who want to use them. They offer a pension scheme designed for automatic enrolment that any UK employer can use to meet their new workplace pension duties, no matter what the size of the organisation. However they are not the only choice.

Questions and Answers

T h e P e n s i o n s R e g u l a t o r

The Pensions Regulator is overseeing the implementation of auto enrolment. They are available for help and guidanceif required. You can visit their website: www.tpr.gov.uk

Your clients MUST register with The Pensions Regulator to confirm their company is complying with auto enrolment.The deadline for registering is 5 months after the company staging date.

Your clients will need to provide a number of details when registering with The Pensions Regulator:

Employer details: Name, Address, Email and all PAYE reference numbers

Details of the pension scheme(s) being used: Scheme name, Employer Pension Scheme Reference (EPSR), Pension Scheme Registry Number (if there is one)

Number of Employees:The number of workers employed on the staging date (or on the last day of any postponement periods).

Number of Employees enrolled into the Pension:Number of eligible jobholders automatically enrolled into the pension scheme

T h e P e n s i o n s R e g u l a t o r

Late ComplianceYour clients may receive penalties/fines for late registration.

• Penalty notices will be issued to punish persistent and deliberate non-compliance.

• A fixed penalty notice will be issued if you don’t comply with statutory notices, or if there’s sufficient evidence of a breach of the law. This is fixed at £400 and payable within a specific period.

The Pensions Regulator can also issue an escalating penalty notice for failure to comply with a statutory notice. This penalty has a prescribed daily rate of £50 to £10,000 depending on the number of staff the company employs.

P e n s i o n P r o v i d e r sA clients choice of automatic enrolment pension scheme could have an impact on the payroll processing time and costs involved. However yours clients should take independent advice in order that they choose a scheme that is a best fit for their business.At QTAC we have been working closely with pension schemes to provide the necessary interfaces.

As well as the set pension provider templates for Nest and NOW Pensions, QTAC AE Editions will have a configurable pension provider communications tool to help clients build their own templates.

Some of your clients may have an existing scheme, in this scenario they should ascertain with their pension provider whether it meets automatic enrolment requirements and is therefore classed as a qualifying scheme. However please note – a client may not be able to use this existing scheme for all employees and an additional scheme may need to be set up to cover all additional automatic enrolment requirements.

C l i e n t s w i t h a n e x i s ti n g s c h e m e

H o w C a n Q TA C H e l p Features included in the Auto Enrolment editions are:

Workforce Assessment Understand who in your client’s workforce will be eligible for Auto Enrolment prior to stagingAssessment and Automatic Enrolment of eligible employees*Continual Assessment of your client’s workforce*

Configure postponementAllow postponement on staging dates*Allow postponement on start of employment*Allow postponement when an employee becomes eligible*

Day to Day Auto Enrolment Management Allow employee opt in/opt outsTermination of automatic enrolment pensionsBulk amendments (phased contribution levels & pension provider movement)

* can be configured to run automatically as you run your payroll

H o w C a n Q TA C H e l p

Employee Communications Create the correct, personalised communications for each of your client’s employees* Automatically prepare communications to all of your client’s employees

Pension Provider Communications Automatically manage Pensions data and payments Pension file templates for new members and contributions A user friendly configurable pension provider communications tool that will allow you to

create data files which may be uploaded through your client’s Pensions portal or send to your client’s Pensions Provider

Auto Enrolment Audit Allows you to view history of Auto Enrolment activity by employee

* can be configured to run automatically as you run your payroll

P o s t p o n e m e n t • QTAC software allows you to postpone employee assessment dates by 3 months or 12 weeks from a companies staging date, new employee start dates and when an employee becomes eligible(depending on the pay frequency of the employees)

• The postponement settings are in Company Maintenance within the Auto Enrolment editions of the software.

• Taking advantage of postponement can simplify the auto enrolment process to ensure compliance. • Below is an example of the how postponement works in QTAC.

F A Q ’ s a r o u n d p o s t p o n e m e n t

Q – Toby is a new employee. His probation is 3 months. Can postponement be used for the new employees?A – Yes postponement can be used in this situation as long as it is communicated to the employee.

Q – I take on seasonal workers. Can I use postponement?A – Yes postponement can be used in this situation as long as it is communicated.

Q – I have already used postponement for Toby. But I have extended his probation period. Can I postpone him for a further 3 months?A – Toby must be reassessed on the last day of postponement, and if he meets the criteria of an eligible jobholder he must be automatically enrolled.

Your Role

Yo u r R o l e• It is unlikely that you will be in a position to provide financial advice about pensions to your clients.

But as a potential first point of contact, you may be in a position to provide information to your clients when they ask about automatic enrolment.

• Employers may need help understanding the tax implications of pensions or gauging how automatic enrolment might impact business performance. And you may be asked to help the employer prepare more generally for automatic enrolment, for example by updating payroll systems, assessing their workforce or communicating to workers.

• Once an employer has selected a good quality pension scheme, they will need to make arrangements to manage employee records and PAYE arrangements. They will need to ensure their contribution payments are on time, and give due attention to data protection and anti-money laundering provisions. These responsibilities form a vital part of the effective running of the pension scheme.

• As their accountant or bureau, your clients may expect you to play a central role in ensuring that the scheme they use for automatic enrolment meets both their needs and the needs of their workers. While it is important to be clear about the scope of your role, you should be able to direct employers to sources of information, guidance and advice to help them select a good quality scheme.

Auto Enrolment for Payroll Bureau/Accountants

• Create a staging date profile of your clients How do I find staging dates out? Visit The Pensions Regulators website and use the Staging Date Calculator

• Understand what your payroll software can and cannot do – As standard – With add on modules – costs ?

S t a g i n g V o l u m e s b y Q u a r t e rThis forecast sets out our expectations of when medium, small and micro employers are likely to become subject to the new automatic enrolment duties (their staging date).

C r e a ti n g a S e r v i c e

Who will do the employee assessment?

Your payroll software What other features will it do?

• Auto process of opt-out refunds?

Pension Provider or middlewareThis will require payroll run plus submission of payroll data to 3rd Party plus amendment on return of employee assessment information

• Does your payroll software create the necessary file?• Maybe one- off staging for a static workforce• May be onerous for volatile workforce• May be impossible for weekly payroll

Who will create and distribute the employees letters?

Your payroll software• Email• Post - Costs

Pension Provider or other agent

What Pension Provider interfaces are available in your software ?

Which Pension Provider and Middleware interfaces are standard within your payroll software – which can be configured?

Does the pension provider or middleware portal allow configuration of the import file, so any file with the full data set can be imported

• Create a service / price matrix bearing in mind the following:

E n g a g e w i t h y o u r C l i e n t s e a r l y• We suggest a minimum of 12 months prior to their staging dates • Make them aware that their choices can affect the services you may be able to provide • Use the flow diagram below to understand the clients current Auto Enrolment status

7 K e y S t e p s t o y o u r C l i e n t s S u c c e s s 1. Know your clients staging date - when they need to act

• For more information about staging dates, please visit http://www.thepensionsregulator.gov.uk/employers/what-is-my-staging-date.aspx

2. Assess the workforce

• you may or may not offer this as part of your service depending on whether your payroll software has this facility

3. Review any existing pension arrangements

4. Communicate the changes to all workers• You may offer this as a service to your clients if your payroll software has such a facility or you have some other

method of delivery

5. Automatically enrol the clients eligible job holders • You may offer this as a service to your clients if your payroll software has such a facility

6. Contribute to the workers’ pensions• Process pension deductions from employees and make employers pension contributions as defined by the pension

scheme rules 7. The client will need to register with The Pensions Regulator and keep records

They are required to inform The Pension Regulator how they have fulfilled their new automatic enrolment duties by registering this information online after their staging date. They will also need to maintain specified records about enrolled workers, their status within the scheme, the payment of contributions and the qualifying scheme itself.

The Pension Regulator are in the process of creating a ‘bulk registration’ process to allow accountants and payroll bureaux to register their client compliance. When this process is defined Qtac will include whatever is necessary to allow the ‘bulk registrations’

H e l p f u l l i n k s t o h e l p y o u r c l i e n t s

Interactive tool Your client's PAYE reference into the tool to find out their staging date. This works best for employers who only use one PAYE scheme for all of their workers.Leaflet An A5 leaflet you can send to your clients to remind them of the steps they should have already completed six months before their staging date.Information If you have several small business clients (fewer than 30 staff), use the table to look up multiple staging dates without having to enter each PAYE reference into the tool.InformationInformation on bringing a staging date forward, which all employers are entitled to do.GuidanceSection 2 contains detailed information on identifying staging dates, including how they are determined for those clients with small businesses who share a larger PAYE scheme with other employers. It also explains how staging dates are determined for employers with complex PAYE structures, or who belong to corporate groups.

All can be found at http://www.thepensionsregulator.gov.uk/professionals/help-clients-prepare-for-auto-enrolment.aspx

Questions and Answers

Our next webinar’s will cover:

Auto Enrolment Functionality in QTAC on 20th March

Please feel free to contact us regarding any questions you may have on support@qtac.co.uk or 01179474747

Stay up to date with the latest news on Auto Enrolment

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