Pensions Auto Enrolment Evaluation report meeting 1

Understanding Auto Enrolment Meeting topics: What is Pensions Auto Enrolment What it Means for you Defining a worker Assessing workers eligibility Defining pensionable pay Choosing your pension provider Planning and staging Day to day administration Taking out the complexity Reducing costs Summary 2

Understanding Auto Enrolment Why are we here? Insight and thought joggers to what the Auto Enrolment process may mean for you Understand the wider impact Auto Enrolment may have on your business Consider the unique challenges Auto Enrolment may create for you Help create your own Evaluation & Blueprint Report 3

Understanding Auto Enrolment What is Pensions Auto Enrolment? The government introduced a law to make it easier for people to save for their retirement. It requires all employers to enrol their workers into a qualifying workplace pension scheme. At present, many workers fail to take up pension benefits because they do not make an application to join their employer's scheme. Automatic enrolment is meant to overcome this. As a result employers have to automatically enrol workers who: Are not already in a qualifying workplace pension scheme (QWPS) Are at least 22 years old Are below state pension age Earn more than £10,000 a year (£192 per week, £833 per month) and Work or ordinarily work in the UK (under their contract) 4

Understanding Auto Enrolment What changes does Auto Enrolment bring? Employers will have to continually assess employees to see if they meet the entry criteria Clear external defined rules and processes to follow Employers do not have the right to exclude employees from enrolment Employees can opt out of schemes but specific rules and timescales are applied There is a minimum joint pension contribution from employee and employer Employers can use two types of postponements, one-off group postponement and subsequent new recruits postponement 5

Understanding Auto Enrolment What does this mean for you? You will need to have a pension scheme in place that meets the Auto Enrolment qualifying pension requirement You will need to review or design your scheme rules, eligibility criteria and agree on your pensionable pay definitions You will need to have a mechanism in place to assess your workers in line with pay periods – weekly, 4 weekly, monthly etc You will need a system to capture employee and sole trader details required to undertake your assessment and pay pension contributions You will need to be able to demonstrate you have communicated employees rights within the specific timescales within the Auto Enrolment Process You will need to have an audit/reporting process in place to manage opt ins and outs 6

Three types of employee assessment groups: Entitled Workers Eligible Job Holders Non Eligible Job Holders Earnings Age Opt-In Entitled Worker Opt-In Entitled Worker Opt-in Non Eligible Job holder Opt-in Non Eligible Job holder Opt-in Non Eligible Job holder Opt in Non Eligible Job holder Auto enrol Eligible job holder Auto enrol Eligible job holder 16  22  SPA  75  £5,772  Qualified Earnings threshold  £10,000 Earnings Trigger £41,865  Upper pensionable earnings limit Clarifying Assessments

Understanding Auto Enrolment? Worker assessments: Auto enrolment will require you to assess your workers every pay reference period to establish if they meet the eligibility criteria to be enrolled Four key factors to consider: What does your payroll cycle look like, how often do you pay, what are your cut off dates for processing (including payment of temps and contractors)? Do you collect the relevant employee data at the right time? What state is your current payroll/HR/recruitment systems processes and staffing levels, can they handle the increased requirements? 8

Understanding Auto Enrolment? Defining pensionable pay: 9 Qualified Earnings are earnings between the lower earnings threshold and upper earnings threshold (£5,772 to £41,865 in 2014/15). Contributions are based on all earnings within these limits. The limits will be reviewed every year. Pension contributions as same as Tier 2

Can you use your existing pension scheme and contribution structures? If so what issues might you face? Is it Auto Enrolment compliant? Does it have any entry criteria? Does it have any age restrictions? Does it have any employer matched contributions criteria? Can it be certified? How do you currently define Pensionable Pay? Do you have any TUPE employees that may have retained pensions rights? If so do you know who they are and what entitlements they may have? If you are required to change schemes or contributions will you transfer your existing scheme members and will they suffer any detriment? Understanding Auto Enrolment? Using your existing Pension Scheme: 10

Whilst every company will be different below is a snapshot of some of the activities required to ensure a successful implementation: Review and design pension arrangements (Defining pay, Scheme rules, assessment approach etc) Assess and select pension provider (if required) Review all internal processes, data and systems, e.g. HR, Payroll, contractor systems Design interfaces between yourselves, your employees and your pension provider Develop and deliver implementation plan Communicate and consult (if required) with employees Test all changes Stage / assess workforce (postpone if using) Manage opt ins Go live Manage opt outs Move to business as usual and the monthly-weekly auto enrolment procedures Studies to date are showing the required lead time to properly plan and implement is between 6 and 12 months Failure to comply with your Auto Enrolment requirements can lead to a £2,500 a day penalty by the regulator (based on a employee sized company) Understanding Auto Enrolment? Implementing Pensions Auto Enrolment: 11

Managing opt-outs (Employees who are automatically enrolled into your pension scheme but do not want to partake) Opt outs must be received within the opt out window (normally circa 30 days from notice of enrolment) Opt outs to be checked and validated by the employer Employee refunded contribution in full and treated as if never a member of the pension scheme Opt outs will need to be recorded and assessed for re enrolled after three years Key considerations: How many opt outs are anticipated at staging and then every pay period? Who will check the validity of the opt outs? How will you manage the refund process, between you the pension provider and the employee How will Salary Sacrifice, if using impact on the opt out process? Note: Opt outs are managed by a third party (usually middle-ware provider or pensions scheme) to ensure no risk of inducement - Current opt out rates Understanding Auto Enrolment? Managing day to day: 12

Managing opt-ins (Employees who are not automatically enrolled into your pension scheme but would like to partake) All employees are required to be notified of their rights to join your scheme Any one who is not automatically enrolled, has the right to opt in to your scheme, they also retain opt out rights in doing so Key considerations: How many opt ins are anticipated at staging and then every pay period? Who will validate the opt in request? Who will assess whether they are an entitled or non entitled worker to understand the correct levels of employer contribution? Understanding Auto Enrolment? Managing day to day: 13

Managing leavers (Employees who were in your pension scheme and have requested to leave or automatically classed a leaver when leaving your employment) All employees have the rights to leave your scheme, if after the opt out period, they will not be entitled to any contribution refunds and along with the employer contribution these will remain invested in their scheme Leavers will be treated in accordance with your pension scheme rules Need be monitored to ascertain if they require re-enrolment after three years Key considerations: Will employees who leave your scheme but remain in your employment by allowed to re-join at any stage? What impact will leaving have on other related benefits such as Death in Service, Salary Sacrifice Whether on-going assessment is required (as may become a eligible job holder and may require re enrolment) Understanding Auto Enrolment? Managing day to day: 14

Understanding Auto Enrolment? Taking the complexity out of Auto Enrolment? What options do you have: Define your scheme rules to suit your circumstances and lower the financial impact on your business Define what makes up pensionable pay Consider whether to apply upper and lower earning limits to pensionable pay Be clear and consistent, trade up windows, opt out, scheme leaver and re-joiner. You can cut down some administration where possible by using consolidating notifications within the Auto Enrolment process Consider using postponement at your staging date and for new joiners Automate and include Auto Enrolment requirements into your business as usual processes? 15

Understanding Auto Enrolment? Taking the cost out of Auto Enrolment? What options do you have to make Auto Enrolment more cost effective? Consider implementing a Salary Sacrifice model to allow both your employees and the business to save on National Insurance contributions You can again use postponement at your staging date to allow you more time to prepare and then postpone any new joiners Use Pensions Auto Enrolment as a tool to engage and motivate employees 16

Do you need to change? Will your scheme be compliant? What about your existing entry criteria? Will your changes trigger any consultation? Do you need to change? Will your scheme be compliant? What about your existing entry criteria? Will your changes trigger any consultation? Review pension arrangements Design interfaces Design pension scheme, source provider Review internal processes Define roles and responsibilities Configure your new processes and system requirements Test end-to-end Define roles and responsibilities Configure your new processes and system requirements Test end-to-end Do you collect the required data at the right time ? What systems configuration will be required? What about your policies, T&Cs etc? Do you collect the required data at the right time ? What systems configuration will be required? What about your policies, T&Cs etc? What will be your priority Scheme type- Automation? What will be your scheme rules? What will be your priority Scheme type- Automation? What will be your scheme rules? Communicate and consultDevelop implementation plan Agree / Plan engagement approach Hit your legislative AE requirements Do you need to consult (60 days)? Manage enquires Agree / Plan engagement approach Hit your legislative AE requirements Do you need to consult (60 days)? Manage enquires Agree approach (Embrace or Comply) Do you have the SMEs in house? Can you spare the resource to implement? Agree approach (Embrace or Comply) Do you have the SMEs in house? Can you spare the resource to implement? Assess workforce-Postpone Plan your payroll reference periods and AE timelines Collect & pass data for assessment (including Sole Trader / Consultants) Plan your payroll reference periods and AE timelines Collect & pass data for assessment (including Sole Trader / Consultants) Go Live Is your scheme certified? Deduct and pay contributions Manage AE as part of your BAU Is your scheme certified? Deduct and pay contributions Manage AE as part of your BAU Manage opt outs and ins Ensure you can manage opt in's from staging Provide method to opt in and out Manage refund process Ensure you can manage opt in's from staging Provide method to opt in and out Manage refund process

Disclaimer: This presentation and the information provided here should not be relied upon as a substitute for extensive independent research before making decisions on Pensions Auto Enrolment. Petaurum Solutions Ltd, Petaurum Legal Solutions Ltd and MDM Chartered Financial Planners are merely providing this presentation for your general information. This presentation and its information does not take into account any particular Company’s Pension objectives, financial situation, or needs. All Company’s should obtain advice based on their unique situation before making any Pension Auto Enrolment decisions. In addition, any projections or views of Pension Enrolment provided by the the named Companies above may not prove to be accurate. Some of the information was obtained from third party sources, and believed to be reliable, however data may have changed as of the published date of this presentation. Petaurum Solutions Ltd, Petaurum Legal Solutions Ltd and MDM Chartered Financial Planners will not be responsible for any losses (direct or indirect) whatsoever incurred by their selection of pensions made by readers and clients as a result of any information contained in this presentation. 18

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