1. Employment issues: The new pensions auto enrolment process
Wednesday March 18th 2015
South and Vale Community Sector Forum, Wantage
David Bates
Oxfordshire Community and Voluntary action

2. LEARNING OBJECTIVES By the end of todays’ session you will be able to:
Explain the background and reasons for the introduction of Pensions Auto Enrolment
Describe what you need to do to meet the new requirements and which of your employees are covered
Identify key dates for meeting the requirements and future contribution increases
Explore and assess the options from differing pension providers
Identify the administrative and payroll  implications
Produce an action plan for you organisation to meet the requirements 

3. Round table introductions
Name
Organisation
Number of Employees(Full time and Part time)
Any self employed contractors?
Have you made a start preparing for Pensions Auto enrolment
Your level of knowledge/awareness of the new regulations

4. IMPORTANT OCVA is not regulated to provide Financial advice.
The aim of todays session is to provide information on the new regulations based on our understanding of requirements at present.
We recommend you speak to your Financial adviser or to one of the National Auto enrolment providers (NEST, NOW etc) to receive advice on your particular circumstances and to put in place an appropriate pension arrangement and system to meet the new requirements.

5. Pensions Auto Enrolment
Pension Reform legislation from October 2012 requires that All Employers will have to automatically enrol eligible employees into a workplace pension and make Employer contributions
Being phased in over 6 years. Larger Employers first

6. Why?
A National Pensions Crisis Recent research* revealed that UK has lowest levels of retirement savings
On average, Briton’s savings only cover 37% of their retirement income
Average Briton has 19 years in retirement but savings last only 7 years
Other income needed for retirement – from the State or employment
HSBC “The Future of Retirement: A New Reality”

7. Historic and projected life expectancy at age 65 years (UK)
1981 Men 14 (79) yrs Women 18 (83) yrs
2010 Men 21 (86) yrs Women 23.7 (88.7) yrs
2051 Men 25.9 (90.9) yrs Women 28.3 (93.3)yrs
Source: Office for National Statistics, Pension Trends Chapter 2 data tables, 16 February 2012

8. NB: State Pension operates on a pay as you go basis

9. Increase in the number of people over 80
In next 22 years the number of people aged 80 and above is expected to double

11. State Pensions are unaffordable
State Pension age has increased and been equalised
Between April 2010 and 2018 State Pension Age will rise to 65 for women and then to 66,67 and 68 for both Men and Women
New State single rate flat pension of around £140 per week to be introduced from April 2016

12. RECAP- Why is the Government introducing Auto enrolment
Insufficient savings for retirement by individuals and take up of personal and occupational pension schemes.
Dramatically increasing life expectancy
State Pension increasingly unable to meet retirement income expectations

13. What is Pensions auto enrolment?
Automatic enrolment means that, rather than having to actively choose to join a pension scheme, staff are put into one by their employer as a matter of course.
If they don’t want to be in the pension scheme, they must actively choose to opt out.

14. Who needs to be enrolled into a workplace pension?
You must automatically enrol all workers who are:
aged 22 to state pension age
working in the UK
earning over £10,000 a year (for 2014/15)
Some workers who don’t meet criteria above are able to opt in to the pension scheme you’re using for automatic enrolment. You must put them in if they ask.

15. Who qualifies as a worker
A “worker” is defined as someone who works under a contract of employment (an employee) or
Has a contract to perform work or services personally and are not undertaking the work as part of their own business.
Staff are considered workers even when they are not carrying out work eg zero-hours contracts

16. Self Employed
Be aware an individual considered as self employed could still be assessed as a worker for auto enrolment if:
The employer expects them to perform the work themselves and they cannot use a substitute.
They are not undertaking the work as part of their own business.

17. How much must you pay (as a percentage of qualifying earnings)
Date
Employer minimum contribution
Total minimum contribution
Employer's staging date to 30 September 2017 1% 2%
1 October 2017 to 30 September 2018 5%
1 October 2018 onwards 3% 8%
Minimum 3 % to come from Employer by 1/10/2018

18. What are qualifying earnings
Earnings between £5,772 and £41,685 for the 2014/15 tax year
Qualifying earnings include a workers salary, wages, overtime, bonuses and commission as and maternity pay
Pay reference period
Annual
1 week
Fortnight
4 weeks
1 month
1 quarter
Bi-annual
Lower level of qualifying earnings
£5,772
£111
£222
£444
£481
£1,443
£2,886
Earnings trigger for automatic enrolment
£10,000
£192
£384
£768
£833
£2,499
£4,998
Upper level of qualifying earnings
£41,865
£805
£1,611
£3,221
£3,489
£10,467
£20,933

19. Employers have a right to decide which definition of salary they use to calculate pension contributions providing it meets minimum requirements

20. What else do you need to do?
Write to each member of staff individually to tell them how they’ve personally been affected by automatic enrolment.
The information you’ll need to tell them is different depending on their rights and the duties you have for them.
You must also provide certain information to the regulator about how you’ve complied with your duties.

21. Information on what you need to do and when?

22. By when?
You need to find your staging date

23. Start planning early
You’ll need to make some changes to allow for automatic enrolment, such as:
Setting up a pension scheme or modifying an existing one
Making any necessary changes to payroll so it can handle the new requirements
Putting systems in place to monitor the ages and earnings of your staff (your payroll may be able to do this)
Writing to your staff.
Pensions regulator automatic enrolment planner will help you find out what you’ll need to do, when you’ll need to do it and roughly how long each part will take.

24. Budget
What level of Pensionable earnings to use? Minimum Banded earnings or Basic Salary or others?
What contribution rate can you afford? The minimum or other?
Will you postpone for up to 3 months and phase in contributions to manage the cost implications?

25. Your existing Pension Scheme if you have one
Need to speak to your Pension provider or IFA and find out whether it meets the criteria for auto enrolment for existing members? Will they admit new members under the auto enrolment provisions? The scheme
Does not have to require employers consent to join or for the worker to provide any information or express a choice
Has to allow workers to join from their first day of employment
Needs to be tax registered in the UK
Have an appropriate default fund

26. Choosing a new Pension Scheme
Employers need to consider the following:
Is it a good quality scheme that is well run
Does it offer value for money
Is the default fund appropriate
Will you receive support with your communications
Will it operate effectively with your payroll process
Refer to Pension regulator guide “Selecting a good quality pension scheme for automatic enrolment”

27. Multi Employer Schemes that help you fulfil your automatic enrolment requirements
NEST
NOW Pensions
The Peoples Pension

29. Payroll Implications Essential to get it right
Need to talk with Pension Provider
and Payroll Provider to ensure you are providing
the information to them in the form they need.
Membership needs to be automatic
Employees have the right to opt out in their one
month joining window and have contributions
Returned.

30. A note of caution!
There have been various changes since the regulations were introduced.
Ensure you are reading the latest guidance. The Pensions Regulator website is a good source
Obtain good quality independent financial advice and/or speak to NEST or NOW or Peoples Pension
You aren’t able to give financial advice unless you are registered/qualified

31. Registration
Employers must register with the Pensions regulator 4 months after their staging date
Registration is completed online
Good practice to begin registration as soon as can to comply on time

32. Ongoing duties Keeping records
Paying across pension contributions on time
Processing opt outs and opt ins
Assessing new starts/when they’re eligible
Your Provider may be able to help with some of these and provide ongoing advice

33. Penalties for non compliance
Fixed Penalty £400
Escalating penalty of £50- £10,000
per day dependent upon organisation size
Failure to pay contributions due –
up to £5,000 for individuals and £50,000 for employers

34. Issues to think about and check
If you have a Pension scheme is it a qualifying one?
Think through the cost implications for your organisation
Is your payroll software adequate to cope with auto enrolment
PREPARE NOW..minimum 12 months before your staging date
Which employees will be covered? (some staff may be covered even if they are self employed or on zero hours contracts)

35. Issues to think about and check(cont)
Check you staging date. Do you need to postpone(max 3 months)
Do you need to set up a pension scheme? NEST, Peoples Pension or NOW may be an option.
Is any proposed new scheme well run, value for money, default scheme and will they help with communications
How will you consult with & communicate about to employees
Penalties for non compliance

36. LEARNING OBJECTIVES
By the end of this session participants will be able to:
Explain the background and reasons for the introduction of Pensions Auto Enrolment
Describe what you need to do to meet the new requirements and which of your employees are covered
Identify key dates for meeting the requirements and future contribution increases
Explore and assess the options from differing pension providers
Identify the administrative and payroll  implications
Produce an action plan for you organisation to meet the requirements 

37. Prepare an action plan for your organisation. What should it contain
Prepare an action plan for your organisation. What should it contain? From todays presentation What issues do you need to be thinking about?

38. Any questions