1. Webinar for Students’ Unions
AUTOMATIC ENROLMENT
Webinar for Students’ Unions
Name: John Hanratty
Title: Head of Pensions, North East
11 December 2013

2. Who are we? National firm Offices in England and Scotland
Top 30 law firm
Established and rated Pensions team – 28 lawyers
Offer discounted legal advice rates to students’ unions through the NUS preferred supplier scheme
“We rely on DWF Pensions Team who consistently deliver a practical approach and cost-effective assistance”
David Maddison, Pensions Director rpmi (Railways Pension Scheme)

3. Welcome: Overview What we will cover today The basics
Sources of Information
What is automatic enrolment?
Key points you need to be familiar with
Can you use your existing pension scheme - is it a qualifying scheme?
What is the process?
Any questions

4. THE BASICS

5. THE BASICS Sources of Information
The NUS HR Support Unit has produced a useful guide to automatic enrolment, in conjunction with DWF LLP – see the NUS Connect HR Resource Hub
The Pensions Regulator’s website ( also contains lots of useful information and template documents
NUS pensions automatic enrolment helpline in conjunction with DWF – first ten minutes of advice is free ( )

6. THE BASICS What is Automatic Enrolment?
It’s the automatic enrolment of certain workers into a workplace pension scheme.
By October 2018 all employers will be subject to the legislation and will be required to contribute at least 3% of the ‘qualifying earnings’ of certain categories of employees into a qualifying workplace pension scheme.
The compulsory pensions auto-enrolment of employees is staggered, and is based on number of employees and PAYE reference numbers an employer holds. The date on which an employer first becomes subject to the legislation is called the employer’s “staging date”.
Employers need to start preparing for these changes as soon as possible.

7. THE BASICS What is Automatic Enrolment?
As a rule of thumb, all employees aged between 22 and state pension age earning over £9,440 p.a. (annualised) will need to be automatically enrolled.
In order to fully assess the workforce, an understanding of the different legislative categories of eligible jobholders, non-eligible jobholders and entitled workers will be required.
For money purchase (defined contribution) pension schemes there will be minimum contribution requirements of 5%, including 1% tax relief, from employees and 3% from employers – the full contribution levels are being phased in over a five year period.
You may be able to use your existing scheme, but you may need to make changes to it first so that it constitutes both a ‘qualifying scheme’ and an ‘automatic enrolment scheme’.
In this presentation we will assume that you will be using a DC scheme for automatic enrolment purposes.

8. KEY POINTS

9. KEY POINTS Know your staging date
An employer’s staging date is determined by the number of employees under its PAYE reference as at 1 April 2012. 
It can be found by inputting your PAYE reference number into the toolkit on the Pensions Regulator’s website at
It may be possible to change your staging date if you share your payroll with a university.

10. KEY POINTS Which workers are affected by automatic enrolment?
You will need to be able to assess which workers are affected by automatic enrolment.
To do this, you need to know:
Who is a worker?
How are workers categorised?
Rule of thumb – virtually all employees
An individual who: 
works under a contract of employment, or
has a contract to perform work or services personally and is not undertaking the work as part of their own business

11. KEY POINTS Categories of workers: Eligible jobholders
Workers aged between 22 and state pension age
Working or ordinarily working in the UK
Earnings payable by the employer in the relevant pay reference period above the earnings trigger for automatic enrolment (currently £9,440 pa pro rata over pay reference periods)
Non-eligible jobholders are workers who are either:
Aged between 16 and 75, working or ordinarily working in the UK and have annual earnings above the lower limit, currently £5,668 but below the earnings trigger for automatic enrolment; or
Aged between 16 and 22 or between state pension age and 75, working or ordinarily working in the UK and have annual earnings above the earnings trigger for automatic enrolment.
Entitled workers
Workers aged 16 to 75
working or ordinarily working in the UK
annual earnings below the lower limit (currently £5,668).

12. KEY POINTS How are workers affected by automatic enrolment?
An eligible jobholder
must be automatically enrolled into a pension scheme on your staging date (unless you operate postponement)
you must pay contributions to this scheme for the employee at the level set out in the legislation 
A non-eligible jobholder
is entitled to opt into a qualifying pension scheme from the staging date
must be provided with information on how to opt in
if they do opt in then the employer must pay contributions to this scheme for the employee at a level set out in the legislation 
An entitled worker
is entitled to access to a pension scheme
the employer must provide them with information in relation to this
the scheme that they are given access to does not have to be the same scheme that eligible and non-eligible jobholders are given access to
the employer does not have to pay any contributions to the scheme in relation to them.

13. KEY POINTS What is a pay reference period?
A pay reference period is, broadly speaking, the period over which the worker gets paid.
Generally speaking, weekly paid staff must be assessed once a week and monthly paid must be assessed once a month to determine whether or not they have triggered the automatic enrolment requirements.

14. CAN YOU USE YOUR EXISTING PENSION SCHEME?

15. CAN YOU USE YOUR EXISTING PENSION SCHEME?
What is an automatic enrolment pension scheme?
There are certain minimum requirements
The scheme must be a qualifying scheme:
The scheme must be a registered pension scheme for HMRC purposes. 
There must be an agreement in place between the employer and the scheme provider for the employer to pay contributions that are at least 3% (transitional provisions apply) of the worker's qualifying earnings in a 12-month period (you can pay more if you wish). 
If there is a shortfall between the employer contribution and at least 8% of the worker's qualifying earnings (see below for a definition of qualifying earnings), there must be an agreement in place between the scheme member (i.e. the worker) and the scheme provider for the scheme member to pay contributions equal to or more than any shortfall. The scheme member will get tax relief on their contribution.  
The scheme must not require the worker's consent to join. 
The scheme must not require the worker to provide any information or make any choices to join or remain a member, e.g. submit an application form or choose a type of fund
The scheme must allow a worker to join it from his first day of employment.

16. CAN YOU USE YOUR EXISTING PENSION SCHEME?
What are qualifying earnings?
Qualifying earnings are defined as being all earnings between £5,668 and £41,450 per annum (for the current 2013/14 tax year).
Any earnings over £41,450 are not taken into account when calculating contributions.
Earnings include salary, wages, commission, bonuses, overtime, statutory sick pay and statutory maternity, paternity and adoption pay.

17. CAN YOU USE YOUR EXISTING PENSION SCHEME?
What are the transitional contribution rates (DC schemes)?
Employer contributions
Total minimum contribution (the balance being made up as employee contribution and tax relief)
Up until 30 September 2017 1% 2%
1 October 2017 to 30 September 2018 5%
From 1 October 2018 onwards 3% 8%

18. CAN YOU USE YOUR EXISTING PENSION SCHEME?
What if you don’t use ‘qualifying earnings’ to calculate pension contributions?
It may be possible to ‘self-certify’ that the scheme is still a qualifying scheme.
There are three different tiers of contributions:
Tier 1
A total minimum contribution of at least 9% of pensionable earnings, of which the employer must contribute at least 4%
Pensionable earnings must be at least equivalent to basic pay
Tier 2
A total minimum contribution of at least 8% of pensionable earnings of which
the employer must contribute at least 3%
and
at least 85% of earnings must be pensionable (this can be calculated as an average at scheme level, rather than per individual)
Tier 3
A total minimum contribution of at least 7% of all earnings of which the employer must contribute at least 3%.
Note that phased in contribution rates apply

19. WHAT IS THE PROCESS?

20. WHAT IS THE PROCESS? Find out your staging date
Go onto and use the staging date tool.
Work out which pension scheme you are going to use as your automatic enrolment scheme
Is your existing pension scheme a qualifying workplace pension scheme, or do you need to review the market and pick a new automatic enrolment pension scheme?
Consider appointing pensions consultants
Undertake a preliminary assessment of your workforce
You will need to know what the different categories of workers are (eligible jobholders, non-eligible jobholders and entitled workers)
assess the category into which each of your workers falls.

21. WHAT IS THE PROCESS? Communicate with staff
It’s important to get staff familiar with the idea of automatic enrolment in the early stages, before any pension contribution is potentially deducted from salaries.
Decide whether you want to postpone automatic enrolment when you reach your staging date.
Automatic enrolment can be postponed for up to 3 months.
This is useful if you want to align the process with the payroll dates.

22. WHAT IS THE PROCESS?
Prepare notices for issuing to the following on or within one month of your staging date:
Eligible jobholders who are already in a qualifying workplace pension scheme
Eligible jobholders who are not in a qualifying workplace pension scheme
Non eligible jobholders who are not in a qualifying workplace pension scheme
Entitled workers who are not in a qualifying workplace pension scheme
Postponement notice (if desired)
Automatically enrol eligible jobholders from your staging date (unless you have chosen postponement)

23. WHAT IS THE PROCESS?
Send details of eligible jobholders to the pension scheme provider
The details you will need to send include:
name
address
date of birth
national insurance number
Ensure that the pension scheme provider sends the terms and conditions of membership of the pension scheme to each jobholder who is being automatically enrolled

24. WHAT IS THE PROCESS?
If you have chosen to postpone automatic enrolment, then on the postponement date you must re-assess all workers
Those who are eligible jobholders must be automatically enrolled into the pension scheme with effect from the postponement date.
It is not possible to issue a further postponement notice.
Employee contributions must be deducted from salary following automatic enrolment.

25. WHAT IS THE PROCESS? Opting out
An eligible jobholder who has been automatically enrolled may opt out of the scheme.
If he does so within one month of being sent the terms and conditions of pension scheme membership or the automatic enrolment information required to be given to a worker (whichever is the later) then he will be treated as never having been a member of the pension scheme and he may receive a refund of his contributions.
An employer must not encourage opt out.
If you receive an opt out notice within the one month opt out period then you must
Make sure the notice is fully completed and signed
Send the opt out notice to the pension provider and keep a copy for your own records
Stop the deduction of pension contributions for that staff member with immediate effect
Refund any contributions already deducted in the next payroll
Arrange for a refund of the employer contributions that you’ve made to the pension scheme in respect of that employee.
If an eligible jobholder opts out of automatic enrolment then he must be reassessed at regular intervals, which is roughly speaking on the third anniversary of your staging date.

26. WHAT IS THE PROCESS? Once a worker has been automatically enrolled
There is no need to continually monitor whether or not he continues to qualify for automatic enrolment. Once he’s in the scheme, he’s in it, unless he opts out of the scheme himself.
An employer must not encourage opt out.
Any worker who is not an eligible jobholder on the date of assessment must be re-assessed each pay reference period.
If he qualifies as an eligible jobholder then he must be automatically enrolled into the workplace pension scheme and provided with relevant information (or have his assessment postponed by way of a postponement notice).
A worker who is assessed as being a non-eligible jobholder must be told that he has the right to opt into the automatic enrolment pension scheme.
If a non-eligible jobholder serves an opt in notice then the same level of pension contributions will be payable as are payable in respect of an eligible jobholder.

27. WHAT IS THE PROCESS?
A worker who is assessed as being an entitled worker must be told that he can opt for the employer to provide him with access to a pension scheme
You do not have to provide access to the automatic enrolment scheme, it can be a different scheme
You are not obliged to make employer contributions in respect of an entitled worker
You will need to continue to monitor the worker for automatic enrolment purposes
You must register with the Pensions Regulator within 4 months of your staging date. This can be done online at

28. ANY QUESTIONS?
The NUS HR Support Unit has produced a useful guide to automatic enrolment, in conjunction with DWF LLP – see the NUS Connect HR Resource Hub
The Pensions Regulator’s website ( also contains lots of useful information and template documents
NUS pensions automatic enrolment helpline in conjunction with DWF – first ten minutes of advice is free ( )