E M P L O Y M E N T & B U S I N E S S L A W Y E R S 1 W W W . T H E L E G A L PA R T N E R S . C O M

Workplace Pensions – “We’re In”!

Your 7 Point Plan How to Comply

Make it work for your business

Avoid big penalties

Get staff on side

Richard Mullett Richard.Mullett@TheLegalPartners.com 0203 755 5288

E M P L O Y M E N T & B U S I N E S S L A W Y E R S 2 W W W . T H E L E G A L PA R T N E R S . C O M

Pension Auto-Enrolment = Workplace Pensions

1 How your business is affected 2 7 Point Plan

3 Battle Stories & Practical Tips

4 Fixed Price services

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Pension Contributions Gross earnings: Salary, Commission, Bonus, Overtime, Sick Pay, Statutory Maternity Pay between £5,824 and £42,385 Date Employer

minimum contribution

Total minimum contribution

Employer's staging date to 30 September 2017

1% 2%

October 2017 to 30 September 2018

2% 5%

1 October 2018 onwards 3% 8%

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DWP Annual Report & Cebr costs

➤  8-9 million workers saving around £11 billion a

year ➤  74% of workers surveyed by DWP know their rights ➤  Set-up costs: average:

➤  £8,900 for small businesses (4 or less employees) ➤  £12,600 for SMEs. ➤  Planning & Preparation time: "up to 103 man days" ➤  Ongoing administration tasks: upto 3 days a month for

some companies.

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7 Point Plan – Start 12 Months

1 Know your Staging Date & Nominate a Contact 2 Assess Your Workforce & Develop a Plan 3 Review Pension Plans, Employment Contracts and Staff

Handbooks & Select Advisers 4 Communicate to your workers 5 Automatically enrol “eligible jobholders” 6 Register with the Pensions Regulator & keep records 7 Contribute to your worker’s scheme + what also to do

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1 Know your Staging Date & Nominate a Contact 12 months before Staging Date

Employer Size Staging / Enrolment Date 250+ 1 Oct 2012 to 1 Feb 2014 50 to 249+ 1 April 2014 to 1 April 2015 30 to 49 members 1 August 2015 to 1 Oct 2015 Less than 30 1 Jan 2016 to 1 April 2017 Remaining & New employers 1 April 2017 onwards upto Feb 2018

then stage as new employer has PAYE staff Postpone Start for 3 Months but ..staff can ask to opt in during this 3 month period

HMRC records. Do not assume correct! Go to http://www.thepensionsregulator.gov.uk/employers/tools/staging-date.aspx. Nominated Contact gets reminders from the Pensions Regulator to stay on track! Get your business registered!

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2 Assess Your Workforce & Develop a Plan – 9 months before Staging Date

Look at who is: ➤  eligible £9,996 + per year “Eligible Salary” = auto enrol + 1%

employer & 2% employee pension contribution ➤  non-eligible above £5,832 & below £9,996 – may opt in &

enrol + 1% employer & 2% employee pension contribution ➤  not eligible below £5,832– right to join but no right to

employer contribution Work out likely employer contributions: ➤  Involve CEO & CFO, HR, Accountants and Lawyers ➤  Cashflow planning & Set up and running budget ➤  HR Communication at the right time of year Register on line – start the process. Avoid last minute rush

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Over 90% - Stay In

➤  Department for Work and Pensions (DWP) Report August 2014

➤  50 biggest employers - on average just 9% opt out. Overall about 10% opt out

➤  Why? More under 30s staying in a pension scheme than other age groups.

➤  Opt out reasons: ➤  unaffordable due to day-to-day expenditure, other types of

saving ➤  over 50s : have enough workplace pensions from previous

employment.

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3 Select Advisers, Choose Provider, Review Pension Plans, Employment Contracts & Staff Handbooks - 6 months before Staging Date ���

Who is a worker? Employees (full & part-time etc), Contractors, Agency staff?

If workers are eligible, you need a pension plan Use existing pension plan? If it complies use it If not – need new scheme. National Employment Savings Trust (NEST), the People’s

Pension and Now: Pensions or Pension companies. Agree charges. 0.75 per cent cap on charges in default funds of DC schemes used for automatic enrolment from April 2015

Administration: Does Payroll Provider support payments? Give a copy of new pension scheme to workers Change employment contracts & Staff Handbooks

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Bottlenecks…..

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4 Communicate to your workers – ���3 months before Staging Date ���

Raise awareness – newsletters, posters Regular communication Open Door to answer questions Less take home salary but pension benefit – IT IS YOURS Write 1 month before implementation date – minimum! Template letters Simplified rules wef April 15: Revised worker information requirements New exceptions

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5 Automatically enrol “eligible jobholders”���

At the Staging Date – double check who automatically enrols & who could opt in. 1 month to enrol.

Give pension scheme provider all the details so the pension scheme makes the investments.

Start making 1% monthly contributions No inducements allowed to opt out. Breach of the

law.

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6 Register with the Pensions Regulator & keep records

5 months after the Staging Date Notify: the name of the pension scheme provider + unique

Employer Pension Scheme Reference No or NEST ID How many workers and how many enrolled CEO details Get Government Gateway ID code & unique letter code

from the Pensions Regulator Re-Register every 3 years

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Keep Records

Staff & pension scheme: ➤  names and addresses of staff automatically enrolled ➤  contributions payable to the pension scheme and when

they were paid ➤  any opt-in or opt-out notices you receive ➤  name and address of the pension scheme ➤  employer pension scheme reference or pension scheme

registry number. Storage and Access Good governance and proof of compliance with your

duties. Keep for 6 years

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7 Contribute to your worker’s scheme

Deduct and pay regular contributions – 19th each month

Process Opt outs Processing opt ins Processing opt-in requests Regularly monitor ages and earnings as this

affects workers Pay rises Joiners & Leavers

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Battle Stories & Practical Tips

What not to do v What to do 1 Check with Payroll & Pension providers - plan and get costings

and select right supplier. AVOID BOTTLENECKS. 2 Test – dummy run 3 months before with named Directors 3 Do not think that postponing by 3 months solves all the issues. 4 Use the 3 month waiting period before new joiners enter to

your advantage (eg after 3 month probationary period). 5 Communicate with the workers! 6 Correct Staff records. Format data for pension provider. 7 See Nov 2014 Automatic enrolment: Annual Evaluation Report

& Government campaigns – this will raise awareness even more!

8 Pension Providers & NEST – pros and cons. Cost effective automated solution.

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HR & Employment & Business Law Issues

Existing workers Changing Employment Contracts – it’s a package. Sell the

benefits. Staff Handbooks Outsourcing Contracts with Advisers & New Pension Providers New & Existing Payroll Providers – new contract & SLA.

Payroll staff & TUPE Hiring New Workers What you can say and not say

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Fixed Price Services

Review Your Plan Review / Negotiate New Contracts with Advisers,

Pension Providers & Payroll Providers Assess which workers qualify Review Employment Contracts & Staff

Handbooks and best way to communicate Training Template Letters Be there to help

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Enforcement & Penalties!

Non-statutory action Guidance and instruction. Warning letter confirming a set time frame for

compliance with the law Statutory notices Statutory notices to make business comply with the law and / or pay any

missed or late contributions + interest. Penalty notices A fixed penalty notice: £400 Escalating penalty notice for failure to comply with a statutory notice:

£50 to £10,000 per day depending upon the number of workers. Fail to pay contributions due: up to £5,000 for individuals and up to

£50,000 for organisations. Fail to comply with a compliance notice/breach of the law: prohibited

recruitment conduct penalty notice: £5,000 for businesses with over 250 staff.

Court action: Pension Regulator “We aim to fully recover all the penalties that we issue.”

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And The Pensions Regulator does so…

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In summary

➤ Tell your CEO/CFO and plan now with your HR Team ➤ Engage your advisers ➤ Join us for our HR Forums in 2015: follow @thelegalpartner

CONTACT RICHARD.MULLETT@THELEGALPARTNERS.COM

T: 0203 755 5288

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