Automatic enrolment

Supporting youevery step of the way

Presented bySimon Taylor | Pearson Hinchliffe Pensions Specialist

■ Background to reform

■ Employer action plan:− What they need to do?− When they need to do it?− Who must they do it for?− How will they do it?

Choosing a pension scheme

Contents

Do I need to do it?

How much will it cost?

Any way out?

The Employer Duties

For professional advisers only

Automatic enrolment & the new employer duties

“The employer must make prescribed arrangements by which the jobholder becomes an

active member of an automatic enrolment scheme...”

The Pensions Act 2008 Section 3(2)

Source: Pensions Act 2008, Office Of Public Sector Information – www.opsi.gov.uk.

TPR 7-step checklist

7. Contribute to your workers’ pensions

6. Register with the Pensions Regulator and keep records

5. Automatically enrol your ‘eligible jobholders’

4. Communicate the changes to all your workers

3. Review your pension arrangements

2. Assess your workforce

1. Know your staging date – when to act

For professional advisers only

The rules

How much do I have to pay?

Defined Contribution – will be phased in to:

8% ‘Qualifying Earnings’ total

3% ‘Qualifying Earnings’ employer minimum

Jobholder can be required to make up the difference

‘Qualifying Earnings’

Between £5,564 - £42,475*

Includes overtime, SSP, SMP etc

* Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012

Admin duties

Employers MUST Employers MUST NOT

Auto enrol and re-enrol/deduct payments

Register/re-register their scheme

Provide information to eligible and non-eligible jobholders Provide information to scheme/provider

Process opt outs/make refunds

Keep records

Discourage membership

Give jobholders the opt-out form

Encourage opt-outs

Use ‘Prohibited recruitment conduct’

Give advice

Sources: Pensions Act 2008, The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010.

Or else...

Compliance/unpaid contribution noticeStage 1 - Warning

Fixed penalty - £400Stage 2 – ‘Wake up call’

Escalating penalty

Workers Penalty per day1-4 £505-49 £50050-249 £2,500250-499 £5,000500+ £10,000

Stage 3 – Persistent offenders

Sources: Pensions Act 2008, Chapter 2, The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010.

For professional advisers only

Doing nothing is not an option...

“A person guilty of an offence under this section is liable -

a) on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or both;

b) on summary conviction to a fine not exceeding the statutory maximum.”

The Pensions Act 2008, Section 45(2)

Source: Pensions Act 2008, Office Of Public Sector Information – www.opsi.gov.uk.

Employer choice:

Automatic Enrolment Schemes

Automatic Enrolment Scheme

Private Scheme

NOW: Pensions1

The People’s Pension2

1NOW:Pensions, marketed by ATP2The People’s Pension , marketed by B&CE

What people think:

About NEST

plus 1.8% contribution charge

Government run

Cheaper than a private scheme

1 2012/13 terms

0.3% amc

One size fits all

Maximum contribution £4,4001

Limited investment choice

No transfers in or out

No trustee discretion on death

What it is:

EmployerLess admin

Added extras

ProviderAdviser

Auto-enrolment system

Building on NEST

Staff appreciationCompetitive edge

AdviserInvestment advice

Scheme designAuto-enrolment Certification

Ongoing reviews

ProviderInvestment options

Technical supportImplementation supportBenefits admin. platformMember communications

Benefits systemsHR systems

For professional advisers only

Summary

Step 1 – Design a solution

Step 2 – Implement the changes effectively

Step 3 – Run the scheme in the most efficient way

Scottish LifeScottish Life

Thank You

Any Questions?

Contact Me:

Simon Taylor0161 785 3508simon.taylor@phsolicitors.co.uk