1. Dealing with the Auto Enrolment Challenge Colin Walker Independent Financial Adviser
Keegan & Pennykid Tel: Website:

2. What The Changes In Pension Provision Mean For You?
What is Auto Enrolment?
What is happening and when?
When do I have to have my scheme in place?
When is my Staging Date?
Who is eligible for Automatic Enrolment
Preparing for Automatic Enrolment

3. What The Changes In Pension Provision Mean For You?
Employer Responsibilities
Employee Communications
Non Compliance & Inducement Fines
What makes a Scheme “Qualifying”
Salary Exchange
Freedom & Choice
Our Role
QUESTIONS!

4. What is Auto Enrolment?
New legislation relating to Workplace Pensions requires employers to automatically enrol specific groups of their workers into a pension scheme. The implementation date of your auto enrolment pension scheme was determined by the number of employees you had on 1 April 2012.

5. What is Happening And When?
Auto Enrolment October February 2018
Staging date depends on employer size, but can be brought forward
Employer must enrol eligible employees (job holders into Qualifying Scheme)
Provide information to all employees
Eventually Employer required to pay 3% & Employee 5% of qualifying earnings (minimum 8% overall)
Register with TPR and keep records
The full basic State Pension in is £ a week for a single person.
Keegan & Pennykid Tel: Website:

6. When do I have to have my scheme in place? Employer Staging Dates
Employer size
Auto-enrolment staging date
PAYE scheme size
Staging date
120,000 or more
1 October 2012
50, ,999
1 November 2012
30,000-49,999
1 January 2013
20,000-29,999
1 February 2013
10,000-19,999
1 March 2013
6,000-9,999
1 April 2013
4,100-5,999
1 May 2013
4,000-4,099
1 June 2013
3,000-3,999
1 July 2013
2,000-2,999
1 August 2013
1,250-1,999
1 September 2013
800-1,249
1 October 2013
1 November 2013
1 January 2014
1 February 2014
April 2014 to 1 April 2015
Test tranche <30 Employees April 2015 to 30 June 2015
30-49 Employees August 2015 to 1 October 2015
Less than 30 Employees January 2016 t0 1 April 2017
New Employers May 2017 to 1 February 2018
The rules for staging within each size grouping have still to be
confirmed.
Keegan & Pennykid Tel: Website:

7. When is my Staging Date?
The Pensions regulator website You will need your PAYE reference to find out your Staging Date.

8. Who is eligible for Automatic Enrolment?
Assessing and categorising the workforce
2015/2016 levels
Qualifying Earnings
Age
< £5,824
£5,824 - £10,000
> £10,000
16-21
Entitled Worker
Non-eligible jobholder
22-SPA
Eligible jobholder
SPA-75
Keegan & Pennykid Tel: Website:

9. Current Earnings Thresholds 2015-2016
Pay Reference Period
Annual
1 week
Fortnight
4 weeks
1 month
1 quarter
Bi-annual
Lower level of qualifying earnings 
£5,824
£112 
£224
£448
£486
£1,456
£2,912
Earnings trigger for automatic enrolment 
£10,000
£192 
£384
£768
£833
£2,499
£4,998
Upper level of qualifying earnings 
£42,385
£815
£1,631
£3,261
£3,532
£10,597
£21,193

10. Preparing for Automatic Enrolment
Employer-no scheme
Employer-with scheme
Find out Staging Date
Assess the workforce
Determine earning definitions
Calculate costs
Consider scheme type
Communicate to workers
Plan implementation
Enrol eligible job holders
Register with TPR & keep records
Contribute to workers pensions
Find out Staging Date
Assess the workforce
Review/determine earnings definitions
Calculate Costs
Review existing Scheme
Consider scheme type
Communicate changes/terms to workers
Plan implementation
Enrol eligible job holders
Register with TPR & keep records
Contribute to workers pensions
Keegan & Pennykid Tel: Website:

11. Employer Responsibilities
Select a pension scheme provider
Assessment of workers pre staging, at staging, ongoing
Run opt-out / opt-in process and communications
3 year re-enrolment cycle
Issuance of statutory postponement notices
Issuance of statutory joining letters
Record keeping for The Pensions Regulator requirements
Reporting
Submission of pension contribution information
Administer refunds
Let’s remind ourselves of what an employer actually has to do. Do they realise just how much work is involved?

12. Employee Communications
Advising the ‘assessed workforce’ about Automatic Enrolment process
Set time limits
Advise employees of their right to ‘opt-out’
Tell them how they may be affected (changes if an existing member, what it means for those not already a member)
Must be in writing, can include - gather/provide addresses

13. Additional Requirements
All Employers will have additional regulatory requirements
Employers prohibited from incentivising opt outs
Register with TPR to show they are meeting their duties (TPR will write to all Employers)
Payments will be monitored by Administrators or Scheme Trustees who need to report failures
Must keep records for 6 years
Must retain Opt in & Opt Out notices for 4 years
Keegan & Pennykid Tel: Website:

14. Non Compliance & Inducement Fines
Fixed fine - if employer doesn't comply, the regulator issues warning and a fine of £400.
Daily fine - where the employer continues to break the regulations, there will be a fine for each day, with the penalty increasing until the company complies. Daily amount depends on the number of the employees:
Where the employer induces employees to opt-out:
Number of Employees
Daily Non Compliance Fine
500 +
£10,000
£5,000
£2,500
5 - 49
£500
1 - 4
£50
Number of Employees
Daily Inducement Fine
250 +
£5,000
£2,500
5 - 49
£1,500
1 - 4
£1,000

15. Contributions – Phasing In
Based on Qualifying Band Earnings
Steady State
Defined contribution 1% employee contribution
3% employee contribution
5% employee contribution
Defined contribution 1% employer contribution
2% employer contribution
3% employer contribution
Staging period
October April 2018
6 April 2019
Keegan & Pennykid Tel: Website:

16. Qualifying status-defined contribution schemes – statutory minimums
Qualifying earnings approach based on band of earnings
Minimum contributions requirements phase in rates*
Date Employer Jobholder Total
From staging date to 05/04/2018 1% 2%
06/04/20189to 05/04/2019 3% 5%
06/04/2019onwards 8%
Qualifying earnings: earnings of more than £5,824 and up to and including £42,385 (for tax year 2015/16)
* The jobholder contribution includes tax relief, where applicable and the table assumes that the employer pays only the minimum contribution (as detailed in the employer contribution column)
Considerations:
qualifying earnings basis may be the lowest cost option
most existing schemes work on basic salary
this may be more onerous to administer
This information is based on our understanding of current legislation, taxation law and HM Revenue & Customs practice, which may change. The value of any tax relief depends on the individual circumstances of the investor.

17. Qualifying status-defined contribution schemes
Alternative quality requirements based on pensionable earnings from first £1
Minimum contributions requirements-phase in rates*
Dates Staging to 05/04/ /04/18 to 05/04/ /04/19 onwards
Tier 1*1
(% based on pensionable earnings
Total = 3%
of which 2% is employer contribution
Total = 6%
of which 3% is employer contribution
Total = 9%
of which 4% is employer contribution
Tier 2*1,2
Total = 2%
of which 1% is employer contribution
Total = 5%
Total = 8%
Tier 3*3
Total = 7%
*1 Pensionable earnings must be at least equal to the jobholder’s basic pay
*2 The total pensionable earnings of all relevant jobholders (in aggregate) to whom this tier applies must constitute at least 85% of their aggregate total earnings.
*3 All earnings must be pensionable.

18. What makes a Scheme “Qualifying”
Does it permit Automatic Enrolment?
Are employees enrolled automatically within 3 months of joining?
Does the scheme have a “Default” investment option?
Recognising the likely characteristics & needs of employees
Appropriate balance between risk & return
Glide path to safer assets as retirement approaches
Does it meet one of the minimum contribution tests?
Does it have an opting out facility?
Keegan & Pennykid Tel: Website:

19. Dealing with the Auto Enrolment Challenge
Who should you use?
Existing or New Scheme!
No Guarantee your existing provider will offer you an Automatic enrolment Scheme!
So who offers what?

20. What are the choices? Existing scheme already in place?
Is it a Qualifying Workplace Pension Scheme?
Will the provider allow the employer to use it for auto enrolment?
Employer likely to need Independent financial advice
NEST
Public service obligation to accept all employers
100% self serve
Traditional pension provider e.g. Standard Life, Scottish Widows
Will they accept the employer?
Will they accept all of the workers?
How much time/notice do they need?
What will it cost?
Auto Enrolment provider e.g. NOW: Pensions
There are several options open to your clients, depending on whether they already have a pension scheme in place or are starting one for the first time. If they already have a scheme they need to take action as soon as possible, asking the existing provider the above questions. Or move to one of the 3 other options – NEST (the quasi-government solution), a traditional provider or a new AE provider (like NOW: Pensions).

21. Types of Scheme?
Chosen scheme must operate automatic enrolment - no member decisions or actions
Adjust existing Group Personal Pension or Occupational Pension?
Or set up new scheme?
Different solutions for employees – min contributions for some, higher for others?
Combined GPP and NEST, NOW: Pensions, The People’s Pension solution?
Lower earners, highly transitional employees go to one of the alternative providers, others to GPP

22. Alternative Providers
Scheme
DC occupational scheme
Trustee corporation
Administration
Tata
Charges
0.3% AMC
Charge on contributions of 1.8%
Decumulation
Self-service decision
Focused choice – panel of providers
Investment
Choice of funds from Cautious to Balanced/High risk
(Employee Contributions deducted Net of Basic Rate Tax and invested Net of Tax Relief)

23. Alternative Providers
Scheme
DC occupational scheme
Trustee corporation
Administration
JLT
Charges
0.3% AMC
Administration charge of £1.50 per member
per month (£0.30 per
month for members earning under £18,000
until 2017
£ VAT per month Employer Fee
Decumulation
Three actively managed fund
components providing Life Styling
Investment
Diversified Growth Fund, a Retirement Protection Fund and a Cash Protection Fund
Alternative Providers
Pensions

24. Alternative Providers
Scheme
DC occupational scheme
Trustee corporation
Administration
In house
Charges
0.5% AMC
£ One off payment via an IFA
£ One off direct
Decumulation
15 year glidepath
Investment
All funds are managed by Legal & General Investment Management, the largest provider of passive tracker funds in the UK
Alternative Providers

25. What is salary Exchange?
Arrangement between the Organisation and employee to give up part of their future earnings (salary) in return for a non-cash benefit
The non-cash benefit is a contribution by the Employer to the Employee’s pension plan
Reduced earnings means reduced liability to income tax and National Insurance
Nominal Salary can be used – other employee benefits
Why only 6%?
Note: all views expressed in relation to salary and bonus sacrifice are based on our understanding of the procedures adopted by an Organisation, and current taxation law and HM Revenue & Customs practice, which may change. 25

26. Freedom & Choice Pre April 2015 from the age of 55 you could
Tax-free Lump Sum of 25%, and either
Purchase an Annuity
Enter Drawdown
Delay taking income

27. Freedom & Choice From 6th April 2015 Tax-Free Cash (TFC) of 25%
Purchase an Annuity
Enter Drawdown
Take the Residual fund, after TFC, as a further lump sum but pay Marginal rate of Income tax
Use of Personal Allowance

28. Freedom & Choice Flexi-Access Drawdown (FAD)
Capped Drawdown – no new plans from April/convert
Uncrystallised Funds Pension Lump Sum (UFPLS)
New Rules For Lifetime Annuities

29. Our Role Provide you with Pension Scheme options
Recommend a suitable Pension Scheme for both you and your employees
Run Group and/or One to One Meetings with your employees
Offer advice to employees in respect of previous pensions
Our fees are based on the work involved, not one size fits all
No automatic ongoing charges

30. Useful Links & Numbers The Pensions Regulator –
Phone: 

31. CONTACT DETAILS
Colin Walker Keegan & Pennykid (Insurance Brokers) Ltd 50 Queen Street
Edinburgh
EH2 3NS
Tel:
Authorised and regulated by the Financial Conduct Authority

32. Questions
Keegan & Pennykid Tel: Website: