1. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Part 2: Getting started Neil Esslemont Head of industry liaison team Rebecca Woodley Industry liaison team December 2014 An introduction to automatic enrolment The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

2. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Scope Getting started This is the second part of the ‘Introduction to automatic enrolment’ module. We recommend that you view part 1 of the Introduction to automatic enrolment: employer duties before you view this module. You may also like to view our modules on Staging dates and Who is your worker? This module will: –get you started in your planning process, and –explain the terminology used.

3. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Contents What do employers need to do? Review of the module. What next?

4. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. An introduction to automatic enrolment Getting started

5. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Automatic enrolment legislation gives employers a duty to: automatically enrol all eligible jobholders communicate to workers providing timely and appropriate information allow non-eligible jobholders to opt-in and entitled workers to join manage opt-outs within the opt-out period and promptly refund contributions automatically re-enrol all eligible jobholders every three years complete declaration of compliance (registration) with the Regulator keep records, and maintain payments of contributions. The employee safeguards state that employers:  must not induce workers to opt-out or cease membership of a scheme  must not indicate to a potential jobholder that their decision to opt-out will affect the outcome of the recruitment process Overview of legal duties and safeguards

6. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What to do before your staging date Know your staging date Nominate a contact Develop an action plan Examine your workforce Choose a pension Check suitability of payroll and IT systems Communicate to staff These may need to be done at the same time or in any order

7. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Know your staging date Your staging date is not based on current worker numbers. It is based on the size of the largest PAYE scheme the employer was using as of 1 April 2012 –any subsequent changes in PAYE size or usage have no effect on the staging date. You should use our staging date tool (see the Useful links section): –You will need all the PAYE references used by the employer as of 1 April 2012. –Enter all PAYEs and the earliest date applies to that employer.

8. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Nominate a contact Nominating a contact is not the same as declaration of compliance (registration). Make sure the right person receives our letters and emails (eg the person in the employer organisation responsible for the project). You can enter the nominee’s contact details at: https://forms.thepensionsregulator.gov.uk/workplacepensionsreform/no minate.aspx?Campaign=019ecr-18-12-6-3-Letters https://forms.thepensionsregulator.gov.uk/workplacepensionsreform/no minate.aspx?Campaign=019ecr-18-12-6-3-Letters If you nominate a colleague, please tell them. You will need the letter code found in the top left of the letter from us. If you don’t have the letter or can’t find the code, please contact us: www.tpr.gov.uk/contact-us.aspx www.tpr.gov.uk/contact-us.aspx

9. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Planning timeline - www.tpr.gov.uk/plannerwww.tpr.gov.uk/planner

10. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Examine your workforce - contracts You will need to know which workers may be affected by automatic enrolment: Workers under a contract of employment (employees) are typically subject to the automatic enrolment legislation. Contractors or agency provided staff could also be subject to the automatic enrolment legislation: –Individuals who contract* to perform work or services personally could be considered workers and you will need to check...  if the individual is paid directly by you (eg on your payroll or invoices payable) or do you pay another company for this work?  and, if you do pay the individual, then you will need to look at this in more detail* to decide if they are workers and, if so, whose workers they are for the purposes of automatic enrolment. * See our module ‘Who is a worker?’ for further information

11. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Examine your workforce - ordinarily working in the UK Only workers who work (or ordinarily work) in the UK are subject to the automatic enrolment legislation, unless they have been seconded overseas. Do you have UK staff who have been seconded overseas? –if so, they are likely to be considered as ordinarily working in the UK and they will need to be assessed. * Do you have any staff normally based overseas who are seconded into the UK? –if so, they may be considered as not ordinarily working in the UK and be excluded. * See our module ‘Who is a worker?’ for further information

12. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Existing pension schemes If you have an existing pension scheme you will need to consider: Are there any existing active members (eg members currently contributing)? Is it a qualifying scheme and does it satisfy the minimum criteria*? –If it is a contract based scheme: –the employer and pension provider need to have a signed agreement ** and –it is likely to need a jobholder agreement for each active member *** –If it is not a qualifying scheme, it may be possible to change the scheme rules – but your existing scheme provider may not allow this. Do you want to use this scheme to automatically enrol your workers? –Your scheme provider may not allow it be made an automatic enrolment scheme (eg scheme provider would need to issue opt-out notices). * See: www.tpr.gov.uk/employers/explaining-qualifying-schemes.aspxwww.tpr.gov.uk/employers/explaining-qualifying-schemes.aspx ** where the employer commits to pay the legal minimum employer contributions *** an agreement by the member to pay the difference between the employer contributions and the legal minimum total contribution

13. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Choosing a new pension If you need or want to use a new scheme for automatic enrolment: How will you choose the scheme provider*, scheme and default fund? See: www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf Some scheme providers may not wish to offer you a pension scheme. Providers may be at full capacity – or have long waiting times. NEST are obliged to offer you a pension scheme... but don’t leave it too late. * See our ‘Useful links’ slide

14. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Check suitability of payroll and IT systems In practice, employers will almost certainly need some software automation. Do you intend to use your payroll software to assess your workers? –can your payroll provider do this for your payroll product/version? –or would you need to upgrade your payroll system to do this? Or, are you going to get another supplier to carry out the assessments (eg pension scheme provider or other non-payroll provider)? How will you automate staff communications (eg a ‘mail merge’ software tool)? Can your IT/computer systems cope if you need to run additional software? Where is the data stored (eg on an integrated HR/payroll system or separately)? How will the systems work together – what data standards do they support? Will you need to send data over your network or over the internet? Will all of the software do what you need it to do? You need to ask.

15. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Mandatory communications to staff There are a number of occasions where an employer is required by law to communicate with their workers: The information will need to be provided directly – by letter, email (or other direct means). You are likely to want to customise the letter templates*. When will you issue these letters/email (and at what point in the pay cycle)? How will you check your employee data is accurate (eg addresses)?  Remember: statutory opt out forms should not be issued by the employer. *See our ‘Useful links’ slide

16. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Additional communications to staff Many employers will want to communicate more than the statutory minimum: Are your staff aware of any changes to existing pension arrangements? Do you need to formally consult with staff/unions on these changes? Many employers have chosen to communicate early to their staff. You may wish to use wall posters or news bulletins (eg paper or intranet).

17. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Develop an action plan To comply with the law, employers are likely to have to consider: HR issues: eg employment and non-employee contracts, employee data accuracy, benefits policies, new joiner processes, staff communications. Pensions issues: eg impact on existing pensions schemes and their members, whether to use an existing scheme or a new pension for automatic enrolment. Payroll issues: eg pay cycles, payroll cut-offs, payroll data accuracy, refunds, contribution calculations, processes which span tax years. Information technology (IT) issues: eg computer systems, reliability and networking issues, data standards to allow different software/systems to work together. Procurement issues: eg any plans to buy new IT systems/software or pensions schemes or upgrade/changes to existing systems/software. Financial issues: eg forecasting and budgeting for any impact on costs.  Employers should make sure they involve the right people in their own organisation and in all their suppliers (or potential suppliers).

18. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Emerging lessons Employers who have staged already have said that they have: Changed employment terms and conditions to fit their automatic enrolment processes and overall benefits policy. Brought forward the staging dates of their smaller companies to the same date. Had to data cleanse their staff data to check it is up to date before staging. Checked the quality and governance of the automatic enrolment scheme’s default fund. Tailored staff communications to their company’s needs and used multiple media.

19. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Other lessons learnt Some employers have: used their existing pension scheme provider for automatic enrolment, or looked for a new scheme provider with automatic enrolment project experience. All employers asked said: Planning was key. Allow 12 months to understand the legislation and plan your strategy. You must have a test payroll cycle period before ‘going live’.

20. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Review of the module

21. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 1: Staging dates are based on current employee numbers? True or false? Answer: False. A staging date is based on the size of the largest PAYE scheme the employer was using as of 1 April 2012. Question 2:How can you find out your staging date? Answer: Use our staging date tool. Enter all your PAYEs and the earliest date will apply. Or, if within 12 months of staging, refer to our letter confirming the date. Questions and answers

22. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 3:Nominating a contact is the same as registration? True or false? Answer: False. They are two distinct processes. (See our planning tool) Question 4: An existing pension can always be used for automatic enrolment? True or false? Answer: False. Although an existing scheme may meet the requirements to be used for automatic enrolment it will not always be the case. The employer should check with the pension provider. Questions and answers continued…

23. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What next?

24. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Know your staging date Who is a worker? Reviewing your pension schemes Employee safeguards Assessment and automatic enrolment Communicate to your workers Postponement and transitional period Joining/ opting In Record- keeping/ Contribute to your pensions Opting out Contractual versus Statutory enrolment Declaration of compliance (register) NowBetween now and stagingAt staging and beyond Automatic enrolment Introduction to automatic enrolment Part 1: Employer duties Part 2: Getting started

25. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Useful links Modules: Introduction to automatic enrolment, Staging dates and Who is a worker? www.tpr.gov.uk/help-clients www.tpr.gov.uk/help-clients Staging date tool: www.tpr.gov.uk/employers/tools/staging-date.aspx www.tpr.gov.uk/employers/tools/staging-date.aspx Planning tool: www.tpr.gov.uk/planner www.tpr.gov.uk/planner Letter templates for employers: www.tpr.gov.uk/employers/letter-templates-for-employers.aspx www.tpr.gov.uk/employers/letter-templates-for-employers.aspx Information about declaration of compliance (registration): www.tpr.gov.uk/employers/automatic-enrolment-declaration.aspx www.tpr.gov.uk/docs/automatic-enrolment-online-registration-checklist.pdf www.tpr.gov.uk/employers/automatic-enrolment-declaration.aspx www.tpr.gov.uk/docs/automatic-enrolment-online-registration-checklist.pdf Our detailed guides for employers and pension professionals: www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx

26. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Useful links continued… More information about pensions and automatic enrolment: The Association of British Insurers: www.abi.org.uk/pensionproviders www.abi.org.uk/pensionproviders The National Association of Pension Funds: www.napf.co.uk www.napf.co.uk National Employment Savings Trust: www.nestpensions.org.uk www.nestpensions.org.uk Independent Financial Advisers: www.unbiased.co.uk www.unbiased.co.uk www.vouchedfor.co.uk The Pensions Regulator: www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf www.tpr.gov.uk/docs/introduction-code-13.pdf

27. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. We’d appreciate your feedback on this presentation https://www.surveymonkey.com/s/TPRBoxSetFeedback

28. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. We are here to help Contact us at: www.tpr.gov.uk/contact-us.aspx www.tpr.gov.uk/contact-us.aspx Subscribe to our news by email: www.tpr.gov.uk/subscribe.aspx www.tpr.gov.uk/subscribe.aspx Connect with us on LinkedIn: www.linkedin.com/groups?gid=2675456 www.linkedin.com/groups?gid=2675456 Follow us on Twitter: https://twitter.com/TPRgovuk https://twitter.com/TPRgovuk Thank you The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

29. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Glossary

30. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Automatic enrolment terms Automatic enrolment scheme – a qualifying pension scheme which can be used for automatic enrolment Eligible jobholder (EJH) – a worker who must be automatically enrolled into an automatic enrolment scheme Entitled worker (EW) – a worker who is entitled to join a pension scheme Jobholder – an eligible jobholder or non-eligible jobholder Non-eligible jobholder (NEJ) – a worker who has the right to opt in to an automatic enrolment scheme Office holder – a person who has been appointed to a position by a company or organisation, but doesn’t have a contract or receive regular payment Personal services worker – an individual who has contracted to perform work or services personally (this is sometimes referred to as a ‘contract of services’)

31. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Automatic enrolment terms continued… Postponement – an optional mechanism to delay the automatic enrolment duties for workers Qualifying earnings – the earnings which determine a worker’s category (EJH, NEJ or EW) and (as a band of earnings) may be used as the definition of pensionable earnings Qualifying scheme – a pension scheme which meets the minimum criteria and so existing members who are eligible jobholders will not need to be automatic enrolled Staging date – the start date of an employer’s automatic enrolment duties Worker – an individual who works under a contract of employment (or a personal services worker)

32. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Other terms Active member – a person who is currently a member of the pension scheme (and would normally be contributing to the scheme) Defined benefit (DB) – a pension scheme where the benefits payable on retirement are known (eg ‘final salary’, where the retirement income is based on the member’s salary) Defined contribution (DC) – a pension scheme where the contributions are known, but the benefits are not guaranteed and are likely to depend on the fund value at retirement Deferred member – a person who is no longer an active member of the pension scheme, but has accrued some benefits (payable on retirement or could be transferred)

33. DEC14GS2 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Other terms continued… Hybrid – a pension scheme with a mixture of DB and DC components PAYE (Pay As You Earn) – HM Revenue & Customs’ (HMRC) tax payment mechanism PAYE scheme – HMRC’s record for an employer who employs a worker or workers for whom PAYE taxable income is payable PAYE scheme reference number – a number issued by HMRC to identify each employer’s PAYE scheme(s) Pensionable earnings – the earnings on which pension contributions are due