Workplace Pensions reform and automatic enrolment

A brief overview

Linden Stables

GCVS Employers’ Advice Service

November 2015

Just before we begin…..

Please don’t shoot the messenger

Workplace Pensions ReformWhen??

Check your Staging date

Workplace Pensions ReformAssess the workforce

• Each worker’s age • Where they are based – UK ?• How much they earn

This will determine if they are an

• Eligible Jobholder (must be auto enrolled)

• Non-eligible Jobholder (can opt in)

• Entitled Worker (can ask to join a pension)

Workplace Pensions ReformCategories of workers

Earnings (2015-16 rates)

Age (inclusive) 16 – 21

22 - SPA

SPA - 74

Under lower earnings threshold (£5,824 or less)

Entitled Worker

Over £5,824 to £10,000

Non eligible Jobholder

Over trigger for auto enrolment (over £10,000 )

Non eligible Jobholder

Eligible Jobholder

Non eligible Jobholder

Earnings triggers

Pay reference period

Lower level of qualifying earnings

Trigger for auto enrolment (if above this)

1 week £112 £192

Fortnight £224 £384

1 month £486 £833

Annual £5,824 £10,000

Eligible jobholder

Non eligible jobholder

Entitled worker

None of these

Age Earns p.a.

17 £4,000 x42 £26,000 x75 £6,000 x22 £10.500 x21 £11,000 X !66 £6,000 x63 £10,500 x OR

SPA depends

X

on age and gender

Workplace Pensions ReformContributions phasing

Transitional period

Duration Employer minimum contribution

Total minimum contribution

1

Employer’s staging date to 30.9.17

1%

2% of QE

2

1st Oct 2017 to 30th Sept 2018

2%

5% of QE

1st October 2018 onwards

3%

8% of QE

Personalised information mustbe given to all categories of worker• Eligible jobholders• Non eligible jobholders• Entitled workers

Can be by letter or email, but must be personal to them, NOT signposting to general info.

Workplace Pensions ReformGiving information

Workplace Pensions ReformWhat if they are already in a pension

scheme?

If a jobholder is already in a qualifying workplace pension scheme with the employer there are no duties to a/e them or provide information.

Onus on employer to check it’s a qualifying scheme + certify contributions basis

(+ certify on Declaration of Compliance how employer is meeting their duties)

Workplace Pensions ReformMonitoring for assessment

Various dates that will trigger an assessment

• Staging date • First day of employment• 22nd birthday (+ 16th birthdays)• Date of receipt of opt in or joining notice• End date of postponement period• First day of each pay reference period (for non

eligible jobholders and entitled workers)

Workplace Pensions ReformPostponement

• Employer can issue written notice to postpone automatic enrolment for up to 3 months

• Can be used for one, some , or all workers

• Gives flexibility

• Useful for variable earnings

• Useful for probation period

! Employee can opt in during postponement period

Workplace Pensions Reform

Opting out • Employee CAN opt out if they choose

• Opt out can only happen after they have become an active member / received the enrolment information

• Opt out notice must be given within a set period of a month (to get full refund)

• Employer must automatically re-enrol them every 3 years if still an eligible jobholder

Workplace Pensions ReformPension Schemes

• Pension scheme must meet minimum requirements

• NEST scheme is one option available for employers who do not already have a qualifying scheme in place or who wish to set up another.

• Important to take Independent Financial Advice

Workplace Pensions ReformDeclaration of Compliance

• ALL employers must register with the Pensions Regulator by making a Declaration of Compliance (DoC)

• Within 5 months of (after) your staging date• DoC is done online• You can start the process early• Checklist is available on TPR site to help

you prepare

Workplace Pensions Reform

Protecting individuals

Unlawful for employer to

• induce a person to opt out/treat less fairly because of membership or potential membership

• make recruitment decisions dependent on the person opting out of pension

NB Safeguards apply from 1st July 2012, regardless of staging date

Case StudiesCase study 1; Leon (age 20, earns £17k)

• Non-eligible jobholder as under 22

• Provide information

• Enrol him if he asks to opt in + make employer contributions

• Auto enrol him when he reaches 22 if not already in scheme

Case StudiesCase study 2: Lee (age 27, earns £4,550)

• Entitled Worker - earns less than £5,824

• Provide information

• Enrol her in a scheme if she gives Joining Notice (no employer ££ required)

• Assess earnings in each pay reference period : may become Non- Eligible or Eligible Jobholder if earnings increase.

Workplace Pensions ReformWhat must employers do? - Overview

• Assess your workforce• Choose a pension scheme• Nominate a contact• Auto enrol eligible staff• Make a Declaration of Compliance• Make pension contributions (eventually 3%)• Process any opt-outs/opt ins and joining requests• Avoid inducement and prohibited activity• Keep accurate records• Provide workers with information• Re-enrolment every 3 years

What to do now

1 Check your staging date 2 Assess your workforce/ raise awareness3 Review your pension arrangements4 Find a pension provider if required5 Think about the administrative+payroll

arrangements that will be needed.6 Nominate a contact for the Pensions

RegulatorMake sure that you are ready to comply with the

law by the time it reaches you!

Sources of help and info

•www.thepensionsregulator.gov.uk

Staging dates/ Guidance notes / details / updates

Interactive Auto enrolment PLANNER

Webinars

Guide to choosing a scheme

HELPLINE 0845 600 1011

•Independent Financial Advisers/ Employee Benefits Consultants

Some auto enrolment schemes for smaller employers

National Employment Savings Trust (NEST)

www.nestpensions.org.uk

The Peoples’ Pension

www.thepeoplespension.co.uk

NOW:Pensions

www.nowpensions.com

GenLife

www.genlifeuk.com

Take advice !!

Any questions?