Workplace Pensions: Workers

What’s this all about? New pension legislation Automatic enrolment and you New pension arrangement What happens next? Any questions?

Why is it important to SAVE? People are living longer – great news, but… …there are fewer people being born… this means… Today there are nearly 4 workers to look after each pensioner By 2050 it is predicted to be down to a staggering 2! That’s almost half a pensioner for each worker to look after! Source: Demos. An Independent think tank researching on behalf of Government

Why is it important to SAVE? The average British worker anticipates stopping work around age 66 and is looking for retirement income of £25,000 a year. That would require savings of £1,000 a month from age 30 Only 45% of people of working age are making enough provision for their retirement 20% were saving nothing in 2013 Source: Scottish Widows UK Pensions Report June 2013

Why do I need a Pension Scheme? Basic State Pension (for the tax year 2015/2016) £115.95 per week Single Person’s £69.50 per week Spouse’s / Civil Partner’s From State Retirement age State Retirement age continues to get later Will just over £17 per day be enough to support your lifestyle in retirement?

Government Intervention In October 2004 Lord Turner chaired the Pension Commission which recommended the requirement for UK employers to automatically enrol their employees into a workplace pension scheme The Government acted and the employer’s requirement to enrol workers on Staging Dates started with larger employers in October 2012 (and some employers started voluntarily from July 2012) All employers must automatically enrol workers by February 2018 There is a requirement for a minimum employer contribution for most workers and this may be dependent on a minimum worker contribution

Workplace Pensions have changed Government introduced new legislation You may be automatically enrolled You and your employer will contribute to the pension arrangement if you are eligible; and You’ll normally receive tax relief from the Government Adviser to check the worker is required to contribute or replace slide with non contributory alternative

Contribution Rates for workers who are eligible Alternative slides using certification set 1, 2 or 3 minimum contribution rates are provided at the end of the slide deck, so use them to replace this slide if appropriate The total minimum contribution from October 2018 must be 8% of the worker’s qualifying earnings The minimum employer contribution from October 2018 must be 3% of the worker’s qualifying earnings Staging Period Employer (minimum) Worker Tax Relief Total Contribution Oct 2012 to Sept 2017 1% 0.8% 0.2% 2% Oct 2017 to Sept 2018 2.4% 0.6% 5% Oct 2018 onwards 3% 4% 8%

XYZ Ltd Scheme Contribution Rates Adviser to complete: Please amend according to the contribution rates agreed by the employer Staging Period Employer (minimum) Worker Tax Relief Total Contribution Oct 2012 to Sept 2017 1% 0.8% 0.2% 2% Oct 2017 to Sept 2018 2.4% 0.6% 5% Oct 2018 onwards 3% 4% 8%

What are qualifying earnings? Alternative slides using certification set 1, 2 or 3 i.e. basic pay or total earnings are provided at the end for you to replace this slide if appropriate Qualifying earnings includes: Salary or wages Bonuses, overtime and commission Statutory payments delivered through payroll e.g. sick pay, maternity pay etc. The lower band of these earnings up to £5,824* pa does not count for calculating contributions and earnings above the upper band of £42,385* pa will also not count * (2015 / 16 tax year)

Who will be automatically enrolled? If you’re at least 22, under State Pension Age and earn more than £10,000* each year… You’ll be automatically enrolled You’ll contribute You’ll normally receive tax relief from the Government Your employer will contribute as well Adviser to check this is the case or replace slide with non contributory alternative – replacement slide provided at end of slide deck *Tax Year 2015 / 2016

What if you are not automatically enrolled? If you are not automatically enrolled this is because: 1. You are under age 22 or over the State Pension Age, or 2. Your earnings are below the Earnings Trigger (currently £10,000 in tax year 2015/16) , or 3. You are already a member of a suitable pension arrangement Adviser to check whether existing scheme members in the audience – if so use this slide, if not use alternative provided at end of slide deck Speaker notes: You may not meet the criteria to be automatically enrolled, this will be the case if; you are under 22 or over the State Pension Age or your salary is below the ‘Earnings Trigger’ which is currently £9,440 a year or £182per week What is the Earnings Trigger? The Earnings Trigger is the minimum amount you must be earning in order to be automatically enrolled. So for this your earnings must be at least £182pw, which is the point where most people start paying Income Tax.

You may be able to Opt in or Join A look at which category you fall into if you are not already in the scheme Age Earnings 16 - 21 22 - State Pension Age State Pension Age - under 75 CAN JOIN AUTO ENROL CAN OPT IN £5,824 - £10,000 Less than £5,824 More than £10,000 Adviser to check whether existing scheme members in the audience – if so use this slide, if not use alternative provided at end of slide deck Speaker notes: From this table you can see whether you’ll be automatically enrolled, or if you can opt in or if you are eligible to join.

What’s the difference between joining and opting in? If you opt in, you must contribute and you will be entitled to contributions from your employer If you join, you can contribute but are not entitled to contributions from your employer To opt in or join you must give a written signed letter/notice or send an email Adviser to check whether opt-ins and/or joiners will be required to contribute. If not replace slide with non contributory alternative provided at end of slide deck Speaker notes: The difference between opting in and joining is: If you opt in you can contribute and you will be entitled to contributions from your employer. If you are eligible to join, you can contribute but are not necessarily entitled to contributions from your employer. If you want to join or opt in you will need to give your employer a signed letter or an email saying you’d like to join. An email must come from an account that we can clearly identify as coming from you. If it’s not your personal account, please include some confirmation that you’ve sent the email.

Opting Out applies if you are automatically enrolled or you opt in Don’t want to remain in the scheme? Option to opt out within 1 calendar month from when you are enrolled and receive a refund of your contributions You can also stop membership after this time but your past contributions won’t be refunded If you leave the scheme and remain a worker in this employment you will be re-enrolled every 3 years Adviser to check whether auto enrolled workers and those who opt-in will be required to contribute. If not replace slide with non contributory alternative provided at end of slide deck

Taking the benefits from your pension account Any time between 55 and 75 even if you are still in work Before age 55 if you are in ill health A tax free lump sum cash of up to 25% of the value of your pension account can be taken A retirement income or lump sum* of your choice You CAN’T usually take out any money from your pension account prior to age 55 A lump sum may be taxed if it exceeds 25%

Before your Retirement You will be contacted in writing before your Selected Retirement Age Your options will be explained, including how to take your benefits

What if I leave my employer or I die? If you leave your employer, your pension account will remain with your pension provider. You can leave it invested, transfer or pay into it yourself If you die, you can leave the money to someone else

What Happens Next? Adviser to complete: Employer specific instructions for details in this section to cover Timescales (and making sure that postponement is addressed, if it is to be used) Contributions Joining info and other communications to be received Opt out notifications etc…

Questions

Alternative slides where no worker contribution will be required

Workplace Pensions have changed Non contributory alternative to slide 7 Government introduced new legislation You may be automatically enrolled Your employer will contribute to the pension arrangement if you are eligible; and You will NOT be required to contribute

Who will be automatically enrolled? Non contributory alternative to slide 11 If you’re at least 22, under State Pension Age and earn more than £10,000* each year… You’ll be automatically enrolled Your employer will contribute You won’t be required to contribute *Tax Year 2015 / 2016

What’s the difference between joining and opting in? Non contributory alternative to slide 14 – assumes workers who join will be required to contribute OPTING IN JOINING If you opt in, you will be entitled to contributions from your employer. You won’t be required to contribute. If you join, you can contribute but are not entitled to contributions from your employer To opt in or join you must give a written signed letter/notice or send an email Speaker notes: The difference between opting in and joining is: If you opt in you can contribute and you will be entitled to contributions from your employer. If you are eligible to join, you can contribute but are not necessarily entitled to contributions from your employer. If you want to join or opt in you will need to give your employer a signed letter or an email saying you’d like to join. An email must come from an account that we can clearly identify as coming from you. If it’s not your personal account, please include some confirmation that you’ve sent the email.

What’s the difference between joining and opting in? Non contributory alternative to slide 14 – assumes no workers will be required to contribute – if there is no difference between the contribution offer in each category please change the heading of the slide. OPTING IN JOINING If you opt in, you will be entitled to contributions from your employer. You won’t be required to contribute. If you join, you will also be entitled to contributions from your employer. You won’t be required to contribute. To opt in or join you must give a written signed letter/notice or send an email Speaker notes: The difference between opting in and joining is: If you opt in you can contribute and you will be entitled to contributions from your employer. If you are eligible to join, you can contribute but are not necessarily entitled to contributions from your employer. If you want to join or opt in you will need to give your employer a signed letter or an email saying you’d like to join. An email must come from an account that we can clearly identify as coming from you. If it’s not your personal account, please include some confirmation that you’ve sent the email.

Opting Out applies if you are automatically enrolled or you opt in Non contributory alternative to slide 15 Don’t want to remain in the scheme? Option to opt out within 1 calendar month from when you are enrolled You can also stop membership after this time If you leave the scheme and remain a worker in this employment you will be re-enrolled every 3 years

Alternative slides where certification set 1, 2 or 3 will be used to calculate contributions

Contribution Rates for workers who are eligible This is an alternative slide to slide 8 using certification set 1 minimum contribution rates The total minimum contribution from October 2018 must be 9% of the worker’s basic pay The minimum employer contribution from October 2018 must be 4% of the worker’s basic pay Staging Period Employer (minimum) Worker Tax Relief Total Contribution Oct 2012 to Sept 2017 2% 0.8% 0.2% 3% Oct 2017 to Sept 2018 2.4% 0.6% 6% Oct 2018 onwards 4% 1% 9%

Contribution Rates for workers who are eligible This is an alternative slide to slide 8 using certification set 2 minimum contribution rates The total minimum contribution from October 2018 must be 8% of the worker’s basic pay The minimum employer contribution from October 2018 must be 3% of the worker’s basic pay Staging Period Employer (minimum) Worker Tax Relief Total Contribution Oct 2012 to Sept 2017 1% 0.8% 0.2% 2% Oct 2017 to Sept 2018 2.4% 0.6% 5% Oct 2018 onwards 3% 4% 8%

Contribution Rates for workers who are eligible This is an alternative slide to slide 8 using certification set 3 minimum contribution rates The total minimum contribution from October 2018 must be 7% of the worker’s pensionable earnings The minimum employer contribution from October 2018 must be 3% of the worker’s pensionable earnings Staging Period Employer (minimum) Worker Tax Relief Total Contribution Oct 2012 to Sept 2017 1% 0.8% 0.2% 2% Oct 2017 to Sept 2018 2.4% 0.6% 5% Oct 2018 onwards 3% 3.2% 7%

What counts in basic pay? This is an alternative slide to slide 10 where certification set 1 or 2 is used Basic pay includes: Salary or wages Statutory payments delivered through payroll e.g. sick pay, maternity pay etc. Basic pay does NOT include Bonuses, overtime, commission, shift allowance, car allowance and other occasional allowances (e.g. relocation allowance) Please add comment here if there is a cap on the amount of basic pay counting for the calculation of contributions.

What counts in pensionable earnings? This is an alternative slide to slide 10 where certification set 3 is used Pensionable earnings includes: Salary or wages Bonuses, overtime and commission Statutory payments delivered through payroll e.g. sick pay, maternity pay etc. Please add comment here if there is a cap on the amount of pensionable earnings counting for the calculation of contributions.

Alternative slides where there is no existing pension plan or it is clear that all workers attending the presentation are not already in provision

What if you are not automatically enrolled? Alternative to slide 12 where there is no existing pension scheme or no scheme member attending the presentation If you are not automatically enrolled this is because: 1. You are under age 22 or over the State Pension Age, or 2. Your earnings are below the Earnings Trigger (currently £10,000 in tax year 2015/16) Speaker notes: You may not meet the criteria to be automatically enrolled, this will be the case if; you are under 22 or over the State Pension Age or your salary is below the ‘Earnings Trigger’ which is currently £9,440 a year or £182per week What is the Earnings Trigger? The Earnings Trigger is the minimum amount you must be earning in order to be automatically enrolled. So for this your earnings must be at least £182pw, which is the point where most people start paying Income Tax.

You may be able to Opt in or Join A look at which category you fall into Alternative to slide 13 where there is no existing pension scheme or no scheme member attending the presentation Age Earnings 16 - 21 22 - State Pension Age State Pension Age - under 75 CAN JOIN AUTO ENROL CAN OPT IN £5,824 - £10,000 Less than £5,824 More than £10,000 Speaker notes: From this table you can see whether you’ll be automatically enrolled, or if you can opt in or if you are eligible to join.