1. Workplace Pensions reform and automatic enrolment
A brief overview
Linden Stables
GCVS Employers’ Advice Service
November 2015
People are living longer so longer retirement period - No. of people age 65 will almost double by 2055
60% of people were not saving for retirement at all
Many are not saving enough
At start of 20th century there were 10 workers to every pensioner
In :1
By :1
Since Oct when auto enrolment began more than 5 million workers have been enrolled into a pension scheme = around 64,000 employers however this represents only 4% of UK employers.
  There are a further 1.8million employers that will have to set up a scheme between now and 2018.
Estimate that by 2018 more than 10 million workers will have been enrolled into a workplace pension.

2. Please don’t shoot the messenger
Just before we begin…..
Please don’t shoot the messenger

3. Workplace Pensions Reform When??
Check your Staging date
Rolled out from October 2012, starting with biggest employers
No later than April 2017 for all organisations employing staff in April 2012.
Staging date based on number of staff in PAYE scheme on 1st April 2012!))
Staging dates
30 to June to 1 October 2015
Fewer than 30 1 January to April 2017
New employers (from April 12 on) will stage from May 17 to Feb 18
NB applies even to individual disabled people who employ their own Personal Assistants
TPR reminder 12 months and 3 months before staging date

4. Workplace Pensions Reform Assess the workforce
Each worker’s age
Where they are based – UK ?
How much they earn
This will determine if they are an
Eligible Jobholder (must be auto enrolled)
Non-eligible Jobholder (can opt in)
Entitled Worker (can ask to join a pension)
State Pension age
Currently, the State Pension age is 65 for men. For women born on or before 5 April 1950, State Pension age is 60.
The State Pension age for women born on or after 6 April 1950 will increase gradually to 65 between now and 2018.
From 2018 the State Pension age will be 65 for both men and women.
All women born on or after 6 April 1950 will have a different State Pension age.
However SPA is increasing !! (eg 66 for me) and
will increase eventually to 68 by 2046

5. Workplace Pensions Reform Categories of workers
These are the 15/16 thresholds (from 6/4/15) and they are reviewed each year.
Qualifying earnings = salary /wages / bonuses / overtime / SSP/SMP etc between
Lower limit £ Up to max of £42,385 (ie you can exclude the first £5824 for purposes of making contributions)

6. Earnings triggers 1 week £112 £192 Fortnight £224 £384 1 month £486
Pay reference period
Lower level of qualifying earnings
Trigger for auto enrolment (if above this)
1 week
£112
£192
Fortnight
£224
£384
1 month
£486
£833
Annual
£5,824
£10,000
4 weekly is £768
Upper level of Qualifying Earnings
£42,385
REFER to Page 3 handout
Categories of workers quiz – work in pairs

7. x X ! x OR X Eligible jobholder Non eligible jobholder Entitled worker
None of these
Age
Earns p.a. 17
£4,000 x 42
£26,000 75
£6,000 22
£10.500 21
£11,000
X ! 66 63
£10,500
x OR
SPA depends X
on age
and
gender
!!!! Age 21 on 11k will become eligible jobholder on 22nd birthday !!!!
A 63 year old male will be below State Pension Age of 65 for men.
For women born on or before 5 April 1950, State Pension age is 60.
The State Pension age for women born on or after 6 April 1950 will increase gradually to 65 between now and 2018.
From 2018 the State Pension age will be 65 for both men and women. All women born on or after 6 April 1950 will have a different State Pension age.

8. Workplace Pensions Reform Contributions phasing
Qualifying earnings = salary /wages / bonuses / overtime / SSP/SMP etc
NB First £5824 of earnings can be disregarded.
Employer must calculate and pay their own contributions + calculate, deduct and make payment of the jobholder’s contribution.
Contributions are due from the automatic enrolment date, so are due on any earnings from that date until the end of the pay reference period.
(So when the auto enrolment date falls within a pay reference period, the first contributions will need to be calculated on part-period earnings.)
This is where postponement may be useful.
8% min = 3% employer + 4% employee + 1% tax relief
No MAX on what employees can be asked to contribute but too high may seem like coercion to opt out!!
SEE Sample Contributions page in handout P 4
NB Employer can decide whether to pay contributions on whole earnings OR just on qualifying earnings. (£5824 to £42,385)
i.E what ‘pensionable pay’ will you use??

9. Workplace Pensions Reform Giving information
Personalised information must
be given to all categories of worker
Eligible jobholders
Non eligible jobholders
Entitled workers
Can be by letter or , but must be personal to them, NOT signposting to general info.
Eligible jobholders
That they have been or will be automatically enrolled into a pension scheme, what this means for them, and the right to opt out.
Non eligible jobholders:
That they may give notice to opt in to an auto enrolment scheme (and receive employer contributions)
Entitled workers:
That they may give notice requiring them to be enrolled in a pension scheme
+ Where to get further info on pensions and retirement saving
Templates available online from TPR

10. Workplace Pensions Reform What if they are already in a pension scheme?
If a jobholder is already in a qualifying workplace pension scheme with the employer there are no duties to a/e them or provide information.
Onus on employer to check it’s a qualifying scheme + certify contributions basis
(+ certify on Declaration of Compliance how employer is meeting their duties)
Requirement to give information below was removed from 1/4/15 but can still choose to give info.
If the assessment shows that the worker is a jobholder (eligible or non eligible) and they are already an active member of a qualifying scheme the employer only has to provide them with prescribed information
In writing
Within 2 months (of date that they met the qualification criteria)
Must include a statement in the DoC as to how duties are being met.
Nb total contribution must be 8% min of QE in total.
If employer cont is less than 8% (must be at least 3), then employee (and govt via tax allowance) must make up the difference. If employee does not want to contribute, must be A/Ed then opt out.
Employer can use a different (but no less favourable) system of defining pensionable earnings. To do this they can certify that their contributions meet the min requirements, by choosing from 1 of 3 types of certification known as Tiers or Sets. EG
An employer decides to use all earnings as pensionable earnings (all wages, overtime, bonuses etc)
From Oct 18, min contribution must be 7%, (3% from employer)
If employer already paid 6%, only 1% required from emplee

11. Workplace Pensions Reform Monitoring for assessment
Various dates that will trigger an assessment
Staging date
First day of employment
22nd birthday (+ 16th birthdays)
Date of receipt of opt in or joining notice
End date of postponement period
First day of each pay reference period (for non eligible jobholders and entitled workers)
Payroll and administrative systems need to be geared up for this!!
NB If they are auto enrolled and their earnings subsequently go down below the a/e trigger level, , they do not come out of the scheme unless they opt out..
Once in, they stay in..
…the pension scheme rules will dictate what action, if any, it requires to be taken by the employer. For example, the scheme rules may dictate that contributions are not taken even though scheme membership continues.

12. Workplace Pensions Reform Postponement
Employer can issue written notice to postpone automatic enrolment for up to 3 months
Can be used for one, some , or all workers
Gives flexibility
Useful for variable earnings
Useful for probation period
! Employee can opt in during postponement period
Postponement can only be on certain dates
Staging date (for workers employed at that time)(NB staging date cannot be postponed)
First day of employment (for workers starting after the staging date)
Date an employee meets the criteria to become an eligible jobholder after the staging date/their start date
Reasons could be
Align auto enrolment with existing payroll process (eg avoid calculation of contributions on part-period earnings).
Smooth the process in relation to very short term workers, or those who trigger auto enrolment just before ceasing employment
Probation (only for 3 months max!)
If a person on variable earnings triggers A/E, employer can give notice of postponement (up to 3 months). If still eligible at end of waiting period, CANT be postponed again consecutively, MUST be A/E/ If not eligible at end of waiting period, back into monitoring pool. If triggers again, employer can postpone again. (BUT worker CAN opt in during waiting period if they choose)

13. Workplace Pensions Reform Opting out
Employee CAN opt out if they choose
Opt out can only happen after they have become an active member / received the enrolment information
Opt out notice must be given within a set period of a month (to get full refund)
Employer must automatically re-enrol them every 3 years if still an eligible jobholder
Eligible jobholder cannot opt out of being auto enrolled, but can THEN opt out.
NB If high no. of opt outs, govt may consider making pensions saving compulsory for employees.
Opt-out rates have been lower than expected. Just 7.4 per cent of eligible workers have chosen to leave the scheme but may be higher as it hits smaller employers.
. Earlier this year, the Department for Work and Pensions cut its forecast for auto-enrolment opt-outs from 30 per cent to 15 per cent.
The Policy Exchange Think tank recently urged the Govt to remove the opt out choice, and also to require higher employee contributions as earnings increase.
NB Re-enrolment is every 3 years from the staging date (not the opt out date) unless the person has opted out within the previous 12 months…then can wait until next reenrolment ‘round’.
Largest employers have just started first round of re-enrolment as they had their staging date in Oct 12.

14. Workplace Pensions Reform Pension Schemes
Pension scheme must meet minimum requirements
NEST scheme is one option available for employers who do not already have a qualifying scheme in place or who wish to set up another.
Important to take Independent Financial Advice
If you have an existing pension scheme in place –
does it meet the Qualifying Scheme criteria? (interactive tool on TPR site)
Does it also meet the auto enrolment criteria? i.e. that there is nothing in the rules of the scheme that would act as a barrier to auto enrolment or other provisions such as having to express a choice in any matter or provide any information in order to remain an active member.
For UK pension scheme to be a qualifying scheme it must
Be an occupational or personal pension scheme
Be tax registered
Satisfy certain minimum requirements (that differ according to type of scheme) (see Contributions slide)
Non UK (EEA) schemes have additional criteria attached
Simple scheme designed to help employers to meet their duties, and help employees to save.
NEST is a non-departmental public body (NDPB) that operates at arm's length from government and is accountable to Parliament through the Department for Work and Pensions (DWP).
For very small employers (5 or less staff) NEST may be one of few options open to them..
Another one is The Peoples’ Pension.
But it is important to get independent financial advice on what scheme would be most suitable for your organisation and staff.

15. Workplace Pensions Reform Declaration of Compliance
ALL employers must register with the Pensions Regulator by making a Declaration of Compliance (DoC)
Within 5 months of (after) your staging date
DoC is done online
You can start the process early
Checklist is available on TPR site to help you prepare
Affects ALL employers.
As a minimum, employers with even just one worker will need to register with the regulator even if they are not eligible for automatic enrolment.
Employers have a 5 month registration deadline  
You can register on the website once your staging date has passed and you've fulfilled any duties you have.
Registration provides a snapshot of your workforce on your staging date and you’ll need to account for each person.
You can (and should) start the process early, filling in details as they come available…don’t leave it until the last day and risk a fine for being late.
Info needed includes
.contact details
Charity number/ companies House number/vat registration number
PAYE scheme reference number
Types of pension schemes used for auto enrolment + reference numbers
Number of people auto enrolled on staging date / postponed etc

16. Workplace Pensions Reform
Protecting individuals
Unlawful for employer to
induce a person to opt out/treat less fairly because of membership or potential membership
make recruitment decisions dependent on the person opting out of pension
NB Safeguards apply from 1st July 2012, regardless of staging date
Employee can enforce their rights / protections via an ET
CASE STUDIES if time
Refer to handout. Get them to work with neighbour

18. Case Studies Case study 1; Leon (age 20, earns £17k)
Non-eligible jobholder as under 22
Provide information
Enrol him if he asks to opt in + make employer contributions
Auto enrol him when he reaches 22 if not already in scheme

19. Case Studies Case study 2: Lee (age 27, earns £4,550)
Entitled Worker - earns less than £5,824
Provide information
Enrol her in a scheme if she gives Joining Notice (no employer ££ required)
Assess earnings in each pay reference period : may become Non- Eligible or Eligible Jobholder if earnings increase.

20. Workplace Pensions Reform What must employers do? - Overview
Assess your workforce
Choose a pension scheme
Nominate a contact
Auto enrol eligible staff
Make a Declaration of Compliance
Make pension contributions (eventually 3%)
Process any opt-outs/opt ins and joining requests
Avoid inducement and prohibited activity
Keep accurate records
Provide workers with information
Re-enrolment every 3 years
The Declaration of Compliance used to be called Registering.
TPR planning tool:
What to do
How to do it
When to do it
How long each step takes

21. What to do now Check your staging date
Assess your workforce/ raise awareness
Review your pension arrangements
Find a pension provider if required
Think about the administrative+payroll arrangements that will be needed.
Nominate a contact for the Pensions Regulator
Make sure that you are ready to comply with the law by the time it reaches you!
TPR planning tool:
What to do
How to do it
When to do it
How long each step takes
Over the past three years an average of 58 employers enrolling each day will go up to an average of 2,000 a day between now and 2018.  …so great pressures on advisers
Fines for non-compliance can be from £50 to £2,500 PER DAY !! (But TPR aim to assist first)
Ensure that you keep the contact name up to date.
Nb nominating a contact person is not the same as making a DoC
CONSULTATION
Since 6 April 2008, employers with at least 50 employees have had an obligation to consult pension scheme members and potential members before making any significant changes to occupational or personal pension provision (including the contribution rate).
Consultation must be with employees or their reps, and last at least 60 days.
Prior to start, certain detailed info on proposal must be given
Eg numbers affected/reasons for change/type of change proposed/worked example of impact/date
All responses to consultation must be considered before final decisions are taken on whether to make the change.
See Capita Briefing notes
BN001 / BN214

22. Sources of help and info
Staging dates/ Guidance notes / details / updates
Interactive Auto enrolment PLANNER
Webinars
Guide to choosing a scheme
HELPLINE
Independent Financial Advisers/ Employee Benefits Consultants
IFA
Allan Maxwell (Director, Chartered Financial Planner)
Corporate Benefits Consulting
Garry Donnelly (MD, Chartered Financial Planner)
Wren Sterling
 or by phone Mob:
Both will have initial chat for free.
Allan Maxwell is offering a package of support for small organisations, including
Audit of existing arrangements
Assessing your current workforce + calculate contribution costs
Help find pension provider (likely to be NEST / Peoples’ Pension)
Help with postponement, joining requests
Registration with TPR
Presentation to or around staging date
Fixed cost £500 - £750 per org (up to 15 staff) (more if more complex issues)
Around £1,000 if up to 30 staff (more if more complex issues)
Garry Donnelly….assist you through the process around £1500

23. Some auto enrolment schemes for smaller employers
National Employment Savings Trust (NEST) The Peoples’ Pension NOW:Pensions GenLife Take advice !!
The People’s Pension from B&CE (Building and Civil Engineering benefits schemes)
From an aspirational concept in 1942 to today's position as the largest stakeholder pension scheme in 2011, B&CE has been providing financial benefits for workers for nearly 70 years. Began by offering a holiday pay scheme to construction workers in war-torn Britain. Now providing a stakeholder pension for over 6,000 corporate customers across the UK.
Not for profit scheme.
NOW:Pensions is a Danish company, set up in the UK as an alternative / rival to NEST

24. Any questions? What if they have more than one job with us?
If one overarching contract of employment, but two or more posts : aggregate all of the worker's qualifying earnings from each post when carrying out the assessment.
If the worker's posts should be treated as separate contracts: assess earnings in relation to each post independently.