Auto-Enrolment- What is actually means

From 2012 for the first time, all UK employers will have to contribute towards a pension plan for their employees

Employer Duties – areas covered Staging Dates Defining the Workforce Assessing the Workforce Selecting a Suitable Pension The Auto-Enrolment Process Processing Opt –Outs Re-enrolment Record Keeping

Staging by employee number Employee No. Staging date 120,000 or more 1 Oct , ,999 1 Nov , ,999 1 Jan , ,999 1 Feb , ,999 1 Mar , ,999 1 April , ,999 1 May , ,099 1 June , ,999 1 July , ,999 1 Aug , ,999 1 Sept ,249 1 Oct Nov Jan Feb April May June July 2014

Defining the Workforce A person is a ‘worker’ if; they work under a contract of employment, or, they have a contract to perform work or services personally

Assessing the Workforce Triggers Staging date First date of employment End of 3 month ‘postponement’ period Receipt of ‘opt in’ form Attaining age of 22 Earnings hurdle cleared 3 year re-enrolment

Assessing the Workforce Aged Working in the UK Earning below £5,035 Aged 22 to SPA Working in the UK Earning above £7,475 Aged or SPA-74 Working in the UK Earning above £7475 Or Aged Working in the UK Earning above £5,035 but below £7,475 Entitled Worker Eligible Jobholder Non-eligible Jobholder Must be automatically enrolled Have the right to join / opt in

What has to happen for each category? Categories of WorkerWhat the employer has to do Eligible Jobholder Employer must automatically enrol and make contributions If using postponement, the employer must provide notification to the eligible jobholder Employee must process any opt out notice Employer must automatically re-enrol approximately every 3 years Employer must keep records of the automatic enrolment process Non-eligible Jobholder Has the right to opt in and the employer must arrange pension scheme membership if employee opts in Employer must provide information about the right to opt in, unless using postponement If using postponement, the employer must provide notification to the non-eligible jobholder Employer must process any opt out notice Employer must keep records of the enrolment process Entitled Worker Has the right to join and the employer must arrange pension scheme membership in employee decides to join Employer must provide information about the right to join, unless using postponement If using postponement, the employer must provide notification to the entitled worker Employer must keep records of the joining process

Employers must auto-enrol into a ‘Qualifying’ pension scheme 1.Use NEST 2.‘Certify’ own existing group pension

How much to pay - ‘Certification’ of existing schemes Pensionable Pay If more than 85% 7% If less than 85% Total Pay 8%9% Option 1Option 3Option 2

How much to pay - NEST £38,185 £5,715 £32,470 8% Total Contribution £ 2, Max £4,200 pa Salary £7,336 0 contribution £20,000 £6,500 8% Total Contribution £

Auto Enrolment Process & Timeline Auto Enrolment Date 1 month joining window Employer provides information to employee and informs pension provider 1 st of month 31 st Month 14 th of month 14 th of next month 21 st of month Payroll cut off Opt out window No DeductionRefund Postponement 3 months Paid up membership

Opt Outs and Re-enrolment Not available from employer Check validity of notice If invalid, inform why and allow 2 extra weeks Notify Pension Scheme Stop the deduction and payment of contribution Refund contribution if necessary Record Re-enrol in 3 years

Record Keeping - Workers Who the record relates toWhat record must be keptHow long it must be kept Job holders and workers who become members Name NI Number DOB Gross earnings in each relevant pay reference period Contributions payable in each relevant pay reference period by an employer and the amount actually paid if different. Includes contributions due on behalf of employer and deductions made from earnings 6 Years Additional information for jobholders only Automatic enrolment date Opt-in notice (original format) The contributions to which the jobholder is entitled under the scheme rules (this demonstrates scheme is a qualifying scheme) Opt out notice (original format) 6 years 4 years Additional information for workers Date with effect from which the worker became an active member Joining notice (original format 6 years

Record Keeping - Pension Scheme Type of pension scheme being usedWhat record must be keptHow long it must be kept Defined contribution (DC), defined benefit (DB) or hybrid scheme Employer pension scheme reference Scheme name and address Scheme contracting out certificate (this applies to contracted-out DB schemes only) Any evidence showing that a scheme meets the test scheme standard (this applies to not contracted out DB schemes only) Non UK administered schemes must keep: – the address of the scheme – name of the authority which carries out functions that correspond to those of the regulator in the country where the scheme is based 6 Years Personal Pension Scheme Employer pension scheme reference Name and address of the pension provider Non UK administered schemes must keep: –the address of the scheme –Name of the authority which carries out functions that correspond to those of the regulator in the country where the scheme is based 6 years

Consequences of non-compliance It will be a criminal offence for employer not to: – set up in first place – auto-enrol – re-enrol every 3 years – make an inducement

Individuals not just employers Trustees or managers of pension scheme Payroll administrators Accountants Scheme administrators Fines: £400 Fixed penalty Up to £10,000 per day