Pension auto enrolment
Transcript of Pension auto enrolment
Auto Enrolment How Does This Affect You ?Colin Walker
Independent Financial Advisor
Today we will look at
Employer Awareness What’s happening and when? Preparing for Automatic Enrolment When do I have to have my scheme in place? What makes a scheme qualifying? Who is eligible for Automatic Enrolment? Contributions – phasing In
Today we will look at
Simplified Certification Options Opting Out Additional Requirements Enforcement Employers- who deals with Auto Enrolment
Issues? Is there anything I can do to fund this more
efficiently?
Employers awareness of Automatic Enrolment
Employers with no existing pension scheme: responses to Automatic Enrolment - NEST
Auto-Enrol into an Employer scheme:76% Unlikely 8% Likely3% Highly Unlikely
Auto-Enrolment into NEST:66% Unlikely7% Likely18% Highly Unlikely9% UnsureSource: ACA survey of smaller firms views on Auto Enrolment And NEST 2011
Auto Enrolment October 2012- September 2017 Staging date depends on employer size, but
can be brought forward Employer must enrol eligible employees (job
holders into qualifying Scheme) Provide information to all employees Eventually required to pay 3% of qualifying
earnings (minimum 8% overall) Register with TPR and keep records 4-8 million new savers in workplace from 2012 Additional £10bn-15bn annual savings by 2050
What’s Happening And When?
Preparing for Automatic Enrolment
Employer-no scheme Find out Staging Date Assess the workforce Determine earning definitions Calculate costs Consider scheme type Communicate to workers Plan implementation Enrol eligible job holders Register with TPR & keep
records Contribute to workers
pensions
Employer-with scheme Find out Staging Date Assess the workforce Review/determine earnings
definitions Calculate Costs Review existing Scheme Consider scheme type Communicate
changes/terms to workers Plan implementation Enrol eligible job holders Register with TPR & keep
records Contribute to workers
pensions
When do I have to have my scheme in place?
Employer Staging DatesEmployer size Auto-enrolment staging datePAYE scheme size Staging date120,000 or more 1 October 201250,000-119,999 1 November 201230,000-49,999 1 January 201320,000-29,999 1 February 201310,000-19,999 1 March 20136,000-9,999 1 April 20134,100-5,999 1 May 20134,000-4,099 1 June 20133,000-3,999 1 July 20132,000-2,999 1 August 20131,250-1,999 1 September 2013800-1,249 1 October 2013500-799 1 November 2013350-499 1 January 2014250-349 1 February 201450-249 1 April 2014 to 1 April 2015Test tranche <30 Employees 1 April 2015 to 30 June 201530-49 Employees 1 August 2015 to 1 October 2015Less than 30 Employees 1 January 2016 t0 1 April 2017New Employers 1 May 2017 to 1 February 2018The rules for staging within each size grouping have still to be confirmed.
What makes a scheme qualifying
Does it permit Automatic Enrolment? Are employees enrolled automatically within 3
months of joining? Does the scheme have a “default” investment
option? Recognising the likely characteristics & needs of
employees Appropriate balance between risk & return Glide path to safer assets as retirement approaches Does it meet one of the minimum contribution tests? Does it have an opting out facility?
Who is eligible for Automatic Enrolment?
Assessing and categorising the workforce
2012/2013 levels Qualifying Earnings
Age < £5,564 £5,564 - £8,105 > £8,10516-21 Entitled
WorkerNon-eligible jobholder
Non-eligible jobholder
22-SPA Entitled Worker
Non-eligible jobholder
Eligible jobholder
SPA-75 Entitled Worker
Non-eligible jobholder
Non-eligible jobholder
Contributions – phasing in
Based on Qualifying Band Earnings
Steady State Defined contribution 1% employee
contribution3%
employee contribution
5% employee contribution
Defined contribution 1% employer contribution
2% employer
contribution
3% employer contribution
Staging period
October 2012 October 2017
October 2018
Simplified Certification Options
Qualifying Earnings Definition (2012/13) – P60 income from £5,564 to £42,475 Employer minimum Minimum totalFull basic salary (pensionable
pay)4% 9%
Full basic salary, and at least 85% of total pay is
pensionable
3% 8%
Total earnings (p60) 3% 7%
Employer industry & demographic will drive decisions
Opting Out
Opting out
Engage Your
workforce
1 mont
h Windo
w
Opt out
Notice
Fill in
Notice
Refund
Worker
Inform Provid
er
Refund Employ
er
Review Engage
your Workforce
1 month Windo
w
Opt out
Notice
Fill in Notice
Refundworker
Inform Provider
Refund Employ
er
Default ‘re-enrolment date’ is 3rd anniversary of Employer staging date every 3 years.
Additional Requirements
All Employers will have additional regulatory requirementsEmployers prohibited from incentivising opt outsRegister with TPR to show they are meeting their dutiesPayments will be monitored by Administrators or Scheme Trustees who need to report failuresMust keep records for 6 yearsMust retain Opt in & Opt Out notices for 4 years
Enforcement
Fines from the RegulatorStage 1 - A compliance/unpaid contribution noticeStage 2 - Fixed penalty of £400Stage 3 – Escalating daily penalties Number of Persons Prescribed daily rate1-4 £505-49 £50050-249 £2,500240-499 £5,000500+ £10,000
Number of Employees Pensions Dept/Human Resources
? ‘Payroll’
Organisation
Employers – Who Deals With Auto Enrolment Issues?
large
medium
small
“…the overarching view is that salary sacrifice is here to stay, and will prove to be a valuable tool for advisers looking to manage the transition to auto enrolment.” Source: Corporate Adviser – September 2010
Is there anything I can do to fund this more efficiently?
Questions