1. Automatic enrolment webinar for business advisers
Information for business advisers
Automatic enrolment webinar for business advisers
Neil Esslemont Head of Industry liaison team Rebecca Woodley Industry liaison manager
6 October 2016
The information we provide is for guidance only and should not be taken as a definitive interpretation of the law. 1

2. Welcome Today we will be looking at the basics of automatic enrolment.
There will then be the opportunity to ask questions.
We won’t assume you already have prior knowledge.
These slides are available to download and the webinar will be available to view again.

3. What is automatic enrolment?
The law on workplace pensions has changed.
Every employer, with at least one member of staff, has new duties, including putting those who meet certain criteria into a workplace pension scheme and contributing towards it.
This is called automatic enrolment.
It’s called this because it’s automatic for staff – they don’t have to do anything to be enrolled into a pension scheme.
It’s not automatic for employers. They need to take steps to make sure staff are enrolled.

4. Overview of legal duties and safeguards
Automatic enrolment legislation gives employers a duty to:
automatically enrol all staff who are eligible (‘eligible jobholders’)
other staff who have the right to ask to opt in or join a pension
manage opt outs and promptly refund contributions
communicate to their staff
complete a declaration of compliance with the regulator
keep records
maintain payments of pension contributions
every three years, automatically re-enrol staff who are eligible
The employee safeguards mean that employers:
must not induce staff to opt out or cease membership of a pension, and
must not indicate, when recruiting new staff, that the decision to employ them will be influenced by whether or not they intend to opt out.

5. Customising the steps for different employers

6. Small/micro employers
Staging
The employer duties apply to each employer from their staging date:
the duties apply to all of the employer’s workers from that date.
An employer’s staging date will be based on the PAYE scheme or schemes that were being used on 1 April 2012.
After 1 April 2012, any change to the PAYE schemes being used will have no effect on the staging date.
However, new employers* will go last, from May 2017.
Do not assume your clients know their staging date - check this on our website
Oct 2012
May 2017
April 2014
June 2015
Large employers
Medium employers
Small/micro employers
New* employers
Feb 2018
*Employers that did not exist or had no workers as at 1 April 2012. 6

7. Staging dates for new employers (post 1 April 2012)
PAYE income is first payable in respect of any worker
Staging date
From 1 April 2012 up to and including 31 March 2013
1 May 2017
From 1 April 2013 up to and including 31 March 2014
1 July 2017
From 1 April 2014 up to and including 31 March 2015
1 August 2017
From 1 April 2015 up to and including 31 December 2015
1 October 2017
From 1 January 2016 up to and including 30 September 2016
1 November 2017
From 1 October 2016 up to and including 30 June 2017
1 January 2018
From 1 July 2017 up to and including 30 September 2017
1 February 2018

8. DC scheme minimum contributions
Phase 1
Phase 2
Phase 3
Oct 2012
May 2017
April 2014
June 2015
Large employers
Medium employers
Small/micro employers
New employers
Min DC 8% total*
Min DC 5% total*
*% of qualifying earnings
Min DC 3% employer*
Minimum DC 2% total contribution*
Min DC 2% employer*
Minimum DC 1% employer contribution*
April 6th 2018
April 6th 2019
Feb 2018 8

9. Who is included in the automatic enrolment duty?
Staff may be subject to the automatic enrolment legislation if they are:
aged 16 to 74 (inclusive), and
work or ordinarily work in the UK* ...
... whether or not they are full time or part time, permanent or temporary.
So, this could include:
staff working overseas who are considered ‘ordinarily working’ in the UK*.
However, the truly self employed are not subject to automatic enrolment.
* the Channel Isles and the Isle of Man are outside the UK

10. 
Who is excluded?
Certain people are exempted from the AE duties, including:
directors not working under an employment contract;
a director who is working under an employment contract for a company with only one employee - but only for the work they carry out for that company;
office-holders who are not considered workers (eg non-executive directors, trustees, elected members) - but they are only excluded for the activities they carry out as an office holder;
the (truly) self-employed.
If an employer does not believe they are an employer they can
tell us at: 10

11. ?
Employer’s option
However, an employer may choose whether or not to automatically enrol certain people who trigger automatic enrolment, including individuals who:
are directors working under an employment contract (from 6 April 2016);
are LLP partners, but are not ‘salaried members’ under HMRC tax rules (duties continue to apply in full to ‘salaried members’);
are in their notice period;
have ceased active membership of a qualifying pension in the previous 12 months;
have HMRC tax protected status for their pension savings. 11

12. Is your client considered the ‘employer’?
Where someone:
is employed by your client (ie they have a contract of employment with your client), or
is directly contracted to perform work for your client and your client pays the individual:
 then your client is considered to be the ‘employer’ (ie the ‘employer’ is the legal entity named in the contract).
Otherwise (ie if your client does not hold the employment or services contract):
if someone working for your client is employed by another company (perhaps because they work for an agency or their own limited company), your client will not be considered the employer and so will have no AE duties for them.
if someone, who is not an employee, is working for your client and is paid for this work by another company or agency, that company will have the responsibility for any automatic enrolment duties, not your client. 12

13. What if someone says they are self-employed?
If someone working for your client says they are self-employed, your client should not assume that this person is exempt from automatic enrolment …
unless they are a director of your client’s company, as a director who is not working under an employment contract is exempt.
Your client should consider if the contract allows the individual to freely* subcontract or substitute somebody else to do the work …
if so, then your client will not have any automatic enrolment duties for the individual.
otherwise, if the individual is normally expected to do the work themselves, then they are considered to have a ‘personal contract’ to perform work or services and the employer will then need to judge whether or not the individual is doing the work as part of their own business.
*If they can send someone else, but only if they are unable to do the work themselves (eg they are on holiday or sick), then this would still be considered a personal contract. 13

14. Is someone working as part of their own business?
If someone (who is not a director) considers themselves self-employed and has a ‘personal contract’:
The employer will need to consider whether the individual is working as part of their own business or not.
There are a number of factors that will help decide this. Does the employer:
have control of the hours they work?
provide any employee benefits?
bear all the significant financial risks in carrying out the work (eg the worker is not financially responsible for their faulty work)?
consider the individual to be part of their own organisation?
provide what is required for the individual to carry out the work (eg tools)?
If most or all of the above are true, it would be reasonable to consider that the individual is not undertaking the work as part of their own business and so are subject to automatic enrolment.
Otherwise, they are truly self-employed and are exempt. 14

15. Weekly gross earnings*
Assessment of workers
Monthly gross earnings*
Age
Weekly gross earnings*
From 16-21
From 22 to SPA*
*State Pension Age
From SPA to 74
£486 and below
Has a right to join a pension scheme If they ask you to, you must provide a pension scheme for them but you don’t have to pay contributions
£112 and below
Over £486 up to £833
Has a right to opt in If they ask to be put into a pension scheme, you must put them in your automatic enrolment pension scheme
Over £112 up to £192
Over £833
Has a right to opt in
Automatically enrol
Over £192
* Values for 2016/2017 financial year

16. Postponement does not change or delay the staging date or declaration of compliance deadline
Postponement delays the duty of automatic enrolment and the need to assess and can be used:
at the employer’s staging date for any or all existing staff
on the first day of employment for any new joiner after the staging date, and
on the date a member of staff meets the criteria to be an eligible jobholder.
Only one postponement per member of staff can be made at a given time.
Each worker can be postponed from one day up to maximum of three months.
The employer must notify any postponed member of staff within six weeks and a day of the start of postponement.
The member of staff has the right to opt in or join during postponement.
Employer must assess on the last day of postponement and:
automatically enrol eligible jobholders, and
for those staff not eligible, monitor them each future pay period.

17. Opting out
Workers automatically enrolled (or who have opted in) may opt out.
Employer must inform staff of their right to opt out and how to opt out.
The employer must not give out or send out opt out forms:
requests to opt out must be handled by the scheme provider, and
completed forms would normally be sent to the employer.
A one calendar month opt out window starts on the later of two dates:
once the worker is an active member of the pension scheme, or
when the employer gives a notice of enrolment letter/ to the worker.
The worker will get a full refund of all contributions.
Early opt outs (before the opt out window starts) - are not allowed.
After the opt out window has closed, staff may still cease active membership and normal pension scheme rules will apply (so they will not get a refund).
A worker who has opted out does not need to be assessed again until the employer’s next re-enrolment date (occurs approx every 3 years).

18. Communicating to workers and keeping records
At staging, employers will need to communicate directly to all their workers.
Employers will also have to write to their workers to inform them if they are being automatically enrolled.
The deadline for communications is usually six weeks.
We have ‘template’ letters employers can customise and use.
Employers must keep records about their workers and the pension scheme used to comply with the employer duties (pension providers and trustees will also have duties to keep records).
Records must be kept for up to six years.

19. Re-enrolment
The re-enrolment date is roughly every three years from the employer’s staging date.
On the re-enrolment date any worker who:
is not an active member of a qualifying scheme, and
has opted out or ceased membership more than 12 months ago...
will need to be re-assessed and, if eligible, automatically enrolled.
For your clients, the essential guide to re-enrolment:

20. Declaration of compliance
After staging, employers must complete a declaration of compliance
and it must be completed within five months of the staging date and
within five months of the 3rd anniversary of the staging date (or previous automatic re-enrolment date)
Employers may receive a penalty fine if they do not complete their declaration on time.
Employers will need to provide certain details, for example:
which pension schemes were used to comply with the duties,
(after cyclical re-enrolment only) their chosen automatic re-enrolment date,
the number of eligible jobholders automatically enrolled into each scheme.
All postponements applied at the staging date must have come to an end before the declaration can be completed.
You can start the online process early and partially complete your declaration.

21. Any questions?

22. Automatic enrolment Update and what’s new22

23. An update - the story so far
About
235,000
employers have automatically
enrolled their staff
185,000 of these were small and micro
employers
There are over
6.6 million
people enrolled into automatic enrolment pension schemes

24. Eligible employees belonging to a workplace pension
Increased by 20 percentage points from 55% to 75%

25. Use of powers Some of our powers used (to 30 June 2016):
84 information notices
30 statutory inspection notices
11,099 compliance notices
582 unpaid contribution notices
3,045 fixed penalty notices
165 escalating penalty notices
More than 95% of the first small employers required to put their staff into a workplace pension have now complied with the law.
9,929 cases closed by 30 June 2016

26. Tribunals
Employers who receive a penalty notice and disagree with our decision to issue it must first ask us for a review.
If they disagree with the outcome of that review they can then appeal the decision to the Tribunal Service.
Employers have 28 days after the review decision is issued in which to appeal.
To date, the Regulator has successfully defended all of the appeals determined by the Tribunal.
The Tribunal has focused on whether the employer has a reasonable excuse for not complying with the compliance notice.

27. Trends

28. Our tailored communications approach
To see examples of the letters we send to employers go to:
Employer with eligible jobholders
Employer with no eligible jobholders
Staging date
-12 -9 -6 -3 +3 +5
Months
Letter

29. Choosing a new pension - how to find one
Pensions suitable for automatic enrolment:
On our website, we list those providers that have said they have pensions available to all small employers looking for a pension for automatic enrolment:
NEST - the pension set up by government
Pensions regulated by the Financial Conduct Authority (FCA)
Independently reviewed master trust pensions
the master trust assurance framework provides an independent review against an industry-wide benchmark of quality
these features in our DC code represent the standards of governance and administration that we expect trustees to attain
Choosing a pension:

30. Cyclical re-enrolment
On a three-yearly cycle, an employer must re-enrol certain eligible jobholders back into an automatic enrolment scheme.
On the re-enrolment date, workers will need to be assessed and (if an eligible jobholder) automatically re-enrolled† if these conditions apply:
they are not already an active member of a qualifying scheme; and
they are not being monitored every pay period (ie they have previously been automatically enrolled or assessed as an eligible jobholder whilst an active member of a qualifying scheme); and
they opted-out or ceased membership of a qualifying scheme more than 12 months ago - or
if they opted-out or ceased membership of a qualifying scheme within the previous 12 months - and the employer wishes to automatically re-enrol them (ie the employer can choose whether to do this or not).
Postponement cannot be used at re-enrolment.
† Exceptions may be applicable (eg if in notice period or have tax protection)

31. Any questions?

32. Thank you We are here to help!
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The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

33. Feedback
We would really appreciate your feedback on this webinar.

34. Additional slides 34

35. Useful links
Staging date tool:
Planning tool:
The essential guide to automatic enrolment:
Our detailed guides for employers and business advisers:
Information about declaration of compliance:
Letter templates for employers:
Choosing a pension: