1. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Part 1: Employer duties 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. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Scope Employer duties This is the first part of the Introduction to automatic enrolment module. No prior knowledge is needed. This module will: –introduce you to the employer duties, and –explain the terminology used. You may also wish to view these modules : –Part two of Introduction to automatic enrolment - Getting started –Staging dates –Who is a worker?

3. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Contents Why is automatic enrolment being introduced? When do the employer’s duties start? What are the employer’s duties? Review of module What next? Glossary

4. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. As a society we are living longer, healthier lives. There are currently four people of working age for every pensioner  by 2050 there will be just two. Millions of people are under-saving for their retirement. Only 1 in 3 private sector workers were in a pension scheme in 2012  and the trend has been downwards for the last 40 years. The reforms being introduced now will help millions of individuals to save more (or save for the first time) for their retirement. 7 million people are under-saving Why is automatic enrolment being introduced?

5. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. An introduction to automatic enrolment When do the employer’s duties start?

6. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. 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. The staging date is based on the size of employer’s PAYE scheme(s) as of 1 April 2012: –any subsequent changes in PAYE size or usage have no effect on the staging date. Generally, larger employers will stage before smaller ones: –new employers* will go last, from May 2017. 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 were not using a PAYE) as of 1 April 2012.

7. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Staging profile (volumes of employers) Planning ahead is key. Very large volumes staging from January 2016 Q1 2015/16 peak includes small and micro employers

8. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. An introduction to automatic enrolment What are the employer’s duties?

9. FEB14ED1 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

10. FEB14ED1 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

11. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Who are your workers? Employers will have duties for workers that are: aged 16 to 74 (inclusive), and who work in the UK* and who are full or part-time, permanent or temporary. Workers will include: employees, and people who are not employees who contract for work personally. There may be other people who will also be included: overseas workers, who are considered ordinarily working in the UK. But:  an office holder ** is not classified as a worker (eg non-executive director, trustee or elected member). * the Channel Isles and the Isle of Man are outside the UK **See our module ‘Who is a worker?’ for further information.

12. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Qualifying earnings Age range 16-2122-SPA*SPA*-74 Under £5,668 † paEntitled Worker Between £5,668 pa and up to £9,440 † pa Non-Eligible Jobholder More than £9,440 † pa Non-Eligible Jobholder Eligible Jobholder Non-Eligible Jobholder * SPA = State Pension Age ** Figures for 2015/16 Entitled workerUnder £5,824** pa Between £5,824 pa and up to £10,000** pa Non-eligible jobholder More than £10,000** pa Non-eligible jobholder Non-eligible jobholder Eligible jobholder Employer must automatically enrol eligible jobholders into an automatic enrolment pension scheme Can request to join a pension scheme Non-eligible jobholders can opt in to an automatic enrolment pension scheme Worker categories

13. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Assessing your workers Employers will need to assess all their workers on their staging date –unless they choose to use ‘postponement’ (described in later slides). All qualifying earnings must be used to assess a worker’s category (ie eligible jobholder, non-eligible jobholder or entitled worker). Qualifying earnings is any component of pay that could be considered one of these pay elements (an employer should use their reasonable judgement): –salary/wages, commission, bonuses, overtime and some statutory payments (excluding expenses and dividends). Eligible jobholders must be automatically enrolled into a suitable scheme –but any active member of a ‘qualifying’ pension scheme with that employer will not need to be automatically enrolled. After the staging date, employers will have to: –assess all new workers who join them –assess some workers every pay period (see planning tool ‘ongoing responsibilities’) –assess some workers again every three years.

14. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What pension schemes can be used? must be registered in the UK or EEA* must have no barrier to automatic enrolment must be a qualifying scheme Automatic enrolment scheme Qualifying scheme must be tax registered: and meet minimum criteria Workers already active members of a qualifying scheme do not need to be automatically enrolled Must be used for automatic enrolment and ‘opt ins’ Employers will need to contribute to the pension scheme *European Economic Area states Employers may also use a qualifying scheme or an automatic enrolment scheme for entitled workers Scheme for entitled workers scheme is registered Employers are not required to make an employer contribution

15. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Pension schemes types Pension schemes can be either: –defined contribution (DC) eg ‘money purchase’ –defined benefit (DB) eg ‘final salary’ or ‘career average’, or –hybrid: a mix of DB and DC. An automatic enrolment scheme must be used for: –the automatic enrolment of eligible jobholders, and –the enrolment of any jobholders who ‘opt-in’. Qualifying schemes: –if an existing scheme is not a qualifying scheme, scheme members would need to be automatically enrolled into an automatic enrolment scheme if they are eligible jobholders –employers may want to change the contributions levels and/or scheme rules of their existing schemes to make them qualifying.

16. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Min DC 8% total * Min DC 5% total * Minimum DC 2% total contribution* DC scheme minimum contributions Oct 2018 Oct 2017 * % of qualifying earnings Feb 2018 Minimum DC 1% employer contribution* Min DC 2% employer * Min DC 3% employer * Phase 1 Phase 2 Phase 3 Oct 2012 May 2017 April 2014 June 2015 Large employers Medium employers Small/micro employers New employers

17. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Postponement Postponement suspends 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 workers –on the first day of employment for any new joiner after the staging date, and –on the date a worker meets the criteria to be an eligible jobholder. Only one postponement per worker can be made at a given time. Can be from one day up to maximum of three months – and this can vary by individual. The employer must notify any postponed worker within six weeks of the start of postponement. The worker has the right to opt-in or join during postponement. Employer must assess on the last day of postponement and automatically enrol eligible jobholders or, for those workers not eligible at that point, monitor them each future pay period.

18. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Opting-in and joining Entitled workers can request to join a scheme at any time. Non-eligible jobholders can opt-in at any time. Eligible jobholders can opt-in during postponement. On receipt of any request, employers need to: –assess the worker, to see if they are a jobholder or entitled worker, then –enrol jobholders into an automatic enrolment scheme, and –enrol entitled workers into a scheme of the employer’s choice. A jobholder must not be required to carry out any further action to achieve active membership (eg the pension scheme should have a default fund).

19. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. ‘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 issues a notice of enrolment letter/email 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, the worker may still request to cease membership of the pension scheme (under the scheme rules).

20. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Communicating to workers At staging, employers will need to communicate* to all their workers, (including existing pension scheme members). Employers need to inform workers of their rights and whether they are being automatically enrolled or postponed. The deadlines for communication are: –two months after staging; for existing scheme members, or –within six weeks for all other communications. Communications must be sent directly to the individual (eg by letter, email, HR web portal). We have provided example ‘template’ letters, which may be customised. * See our planning tool and ‘tell your staff’

21. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Re-enrolment The re-enrolment date is every three years from the employer’s staging date. However, an employer may choose to move their re-enrolment date to any day, up to 3 months before, or after, the third anniversary. The employer will need to continue to assess any workers they are monitoring* every pay reference period. In addition, any person who, on the re-enrolment date: –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 an eligible jobholder, automatically enrolled. * See our planning tool and ‘ongoing responsibilities’

22. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Record-keeping 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). An employer can use electronic or paper filing systems to keep or store any records, as long as these records can be produced in a legible way. Most records must be kept for six years. Those that relate to opting out must be kept for four years. The records must be provided to The Pensions Regulator, on request. We can conduct an inspection, if we have reasonable grounds to do so (for example, this may be as a result of a whistleblower alert). * See planning tool and ‘maintain records’

23. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Declaration of compliance (registration) Employers must complete the declaration* process to confirm they have complied. (* see planning tool ‘declaration of compliance’) For employers who stage from 1 January 2014 onwards, the deadlines are: –five months after the staging date(for employers who staged in 2012 and 2013, the deadline after staging was four months), and –two months after every re-enrolment date. Employers may receive a penalty fine if they do not complete the declaration on time. Employers will need to provide certain details, for example: –which pension schemes were used to comply with the duties, and –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.

24. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Review of the module

25. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 1: Who does the law make responsible for carrying out the duties? Answer: The employer (even if some actions are delegated to a third party). Question 2:Who must be enrolled, if they request to opt in? Answer: A non-eligible jobholder (at any time) or an eligible jobholder during postponement. Question 3:Only employees are included in the automatic enrolment legislation. True or false? Answer: False. Duties may apply to other workers, not just employees (eg personal services workers). Questions and answers

26. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 4:If an eligible jobholder is an existing member of a non-qualifying pension scheme, what will the employer need to do? Answer: They could stay in the non-qualifying scheme but this would not meet the employer duties. The employer could see if the existing scheme can be made qualifying, and if it can, make the changes and continue to use it. Alternatively, the employer could enrol them into a new automatic enrolment scheme. Question 5:What happens if a worker sends in an opt-out notice before their opt-out window has started? Answer: It cannot be accepted. The opt-out window will not open until they are an active member of the pension scheme and the employer has issued the enrolment letter. Questions and answers continued…

27. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 6:How long can the assessment of workers be postponed? Answer: Between one day and three months. Question 7:If postponement is used, what three duties still apply? 1.Issue postponement notices, within six weeks - to all postponed staff (including new joiners). 2.Enrol any jobholders who opt in during postponement into an automatic enrolment pension scheme. 3.Enrol any entitled workers who want to join a pension scheme. Questions and answers continued…

28. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Question 8:What is the deadline to complete the declaration of compliance (registration) after staging? Answer:Five months after the staging date for those staging from January 2014. Question 9:Who do employers need to write to at staging (eg send a letter or email)?  Workers not in a pension scheme?  Active members of a qualifying pension scheme?  All workers?  Eligible jobholders being automatically enrolled? Questions and answers continued…

29. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. What next?

30. FEB14ED1 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

31. FEB14ED1 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

32. FEB14ED1 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

33. FEB14ED1 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

34. FEB14ED1 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.

35. FEB14ED1 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Glossary

36. FEB14ED1 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’)

37. FEB14ED1 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)

38. FEB14ED1 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)

39. FEB14ED1 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