Transcript The Automatic Enrolment Challenge

15.10 – 15.35
The Automatic Enrolment Challenge
Neil Mutton
Director, Q & A People Matter
www.ifa.org.uk
The Automatic Enrolment Challenge
Neil Mutton
Director
Q&A People Matter Ltd
www.qnapm.com
What will be answered in this session
- Current statistics
- What is the pending demand ?
- Planning for success
- Pension Scheme options
- Compliance and Record Keeping solutions
- Employer types emerging
Who are Q&A People Matter
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Employee Benefits
HR services
Payroll
Financial Advice & Education
• 40 staff, London, Dubai, Isle of Man
Accountants are key to your Clients success
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First port of call for most things
Probably run payroll for them
Understand their business
Help them budget
Take the pain away …
They will need guidance !
Auto Enrolment is a complex Project Plan !
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Employee Benefits
Finance / Budgeting
HR / Contracts, Handbooks
Payroll / Complexity & Process
Communication & Education
Staff Reward and Motivation
Timelines , Milestones, Deliverables
Staging profile (volumes of employers)
Source: The Pension Regulator, Feb 2014
In Summary
Automatic Enrolment legislation give employers a duty to:
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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
Facilitate Opt Outs within the opt out period and promptly refund contributions
Automatically re-enrol all eligible jobholders every three years
Complete registration with the Pensions Regulator
Keep records
Maintain contributions
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
Do you know your clients situation ?
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Staging Date
Business Complexity
Time to go to reach staging date
Budget
• Pre – staging date activities
• For ongoing Pension contributions
How will they communicate to their staff ?
Who will do all the work ?
How will you offer guidance ?
Work with experts ?
DIY ?
Key decisions cannot be left until the last
minute
Phasing the minimum contributions: Now - 2018
2%
5%
8%+
Defined contribution 1% employee contribution
3% employee
contribution
5% employee
contribution
Defined contribution 1% employer contribution
2% employer
contribution
3% employer
contribution
Staging period
October
2012
October
2017
October
2018
Cost / Budget elements
• Cost of designing/planning your Employers scheme
• Cost of implementing:• Pension scheme(s) / contributions
• Communication to / Educating staff
• Cost of Running the scheme
• Pension contributions
• Compliance & Administration
8 Steps to Auto-enrolment:
Employer types emerging
Sophisticated Employers
“Take The Pain Away “ Employers
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Existing scheme / benefits
Business complexity
Staff Hierarchy in place
6m + to go before staging date
Review existing situation
Willing to consider ‘the best’
Undertake full review
 More advice
 Longer implementation
No scheme in place
No budget in place
Left things late
staging date looming – planning?
Low business complexity
‘Vanilla’ solution
 Less advice
 Shorter implementation
Employee Benefits Strategy & Budget
SIPP ?
Personal Pension ?
Executives
Senior
Management
Junior
Management
Junior
Management
Workers
Workers
Same scheme for everyone ?
Same % contribution for everyone ?
Workforce assessment: “Qualifying Earnings basis”
2014/15 tax year
£41,865
£36,093
£10,000 .. The trigger for Auto-enrolment
£5,772
Assessing your workforce
Earnings
16 - 21 yrs
Age (Inclusive)
22 - SPA
SPA - 74
< £5,772
Entitled Workers
£5,772 - £10,000
Non-Eligible Jobholder
> £10,000
Non-Eligible
Jobholder
Eligible
Jobholders
Non-Eligible
Jobholder
Eligible Jobholders
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Aged between 22 and State Pension Age
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Have ‘qualifying earnings’ in the Pay Reference Period
Thresholds v Pay Reference Periods (PRP) 2014-15
† For other PRP durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00)
or number of months by the monthly amount (eg £833.00) etc
- or pro-rata if not an exact multiple of any of the above.
N.B. The Secretary of State will review these figures each tax year.
Assessing your workforce
Earnings
Age (Inclusive)
16 - 21 yrs
22 - SPA
SPA - 74
< £5,772
Entitled Workers
£5,772 - £10,000
Non-Eligible Jobholder
> £10,000
Non-Eligible
Jobholder
Eligible
Jobholders
Non-Eligible
Jobholder
Non-Eligible Jobholders
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Can choose to ‘opt-in’
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Employers must then enrol them and make contributions
Assessing your workforce
Earnings
Age (Inclusive)
16 - 21 yrs
22 - SPA
SPA - 74
< £5,772
Entitled Workers
£5,772 - £10,000
Non-Eligible Jobholder
> £10,000
Non-Eligible
Jobholder
Eligible
Jobholders
Non-Eligible
Jobholder
Entitled
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Age 16 – 74
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Earning < £5,772
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The employer does not have to make contributions for them
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Does not have to be the scheme approved for AE
Can Employers Postpone ?
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Postponement suspends the duty of automatic enrolment and the need to assess.
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Can be from 1 day up to maximum of 3 months - and can vary by individual.
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The employer must notify any postponed worker within 6 weeks.
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The worker has the right to Opt In or Join during postponement.
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So the pension scheme still has to be set up on the staging date !
Which pension scheme provider is best ?
Does it matter ?
HR considerations
• Recruitment conduct
• Probationary Periods
• Employment contracts
• Offer letters
• Policies / deduction of wages clauses …
• Data protection
(sending data to 3rd party pension providers)
How & when to communicate to workers
•Communications must be direct (e.g. letter, e-mail, payslip, HR web-portal).
•At staging, need to communicate to all workers, even scheme members.
•Need to inform of rights the first time† a worker becomes a particular category
Getting it wrong ….
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….Compliance & Record
Keeping
tPR: Powers & Penalties
Escalating penalty
Persistent/Deliberate
Offenders
Fixed penalty
£400
Workers
1-4
5-49
50-249
250-499
500+
Penalty per day
£50
£500
£2,500
£5,000
£10,000
Prohibited recruitment conduct
Workers
1-4
5-49
50-249
250+
Fixed penalty
£1,000
£1,500
£2,500
£5,000
Third parties
£200 per day escalating
(up to £50,000)
Record Keeping
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Employers,….., must keep records about their workers and the pension
scheme used to comply with the employer duties.
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An employer can use electronic or paper filing systems ……………………….
……..as long as these records are legible or can be produced in a legible way.
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Most records must be kept for six years;
…. those that relate to opting out must be kept for four years.
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The records must be produced to The Pensions Regulator, if requested.
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The Pensions Regulator can conduct an inspection if they have reasonable
grounds to do so (e.g. if there is a Whistleblower).
Data to be kept by employers
Data will need to be kept for:
Workers who become scheme members
(e.g. Name, DoB, NI number†, gross qualifying earnings, contributions paid).
Plus, for Jobholders only:
•Date of automatic enrolment or the original format Opt In notice;
•Contributions entitled to under scheme rules.
Plus, for Entitled Workers only:
•Date with effect from which the worker became an active member;
•The original format Joining Notice.
All workers for whom the employer has used postponement:
(Name, NI number†, date the notice was sent to the worker).
Details of the pension scheme(s)†† used:
•EPSR (Employer Pension Scheme Reference);
•Any evidence showing that a scheme is a Qualifying Scheme;
•Pension provider / scheme name & address.
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where one exists
data also to be kept by pension scheme provider
Options to manage Compliance
and record keeping
•Manual administration
•Payroll software
•Accounting software
•HR software
•Bespoke Middleware
Functionality ?
Time ?
Costs ?
How does an Employer choose ?
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Complexity of the business
Existing software (Payroll / HR etc)
Pension scheme provider solution exist ?
Bespoke Middleware ?
Functionality comparison of each option
Cost comparison of each option
The employer duties must be delivered
Middleware: Links with any/all external systems
In Summary
Existing Provision
Take advice
Are you compliant ?
• Eligibility ?
• Contribution structure ?
• Project Plan
• Budget
• Engage your staff
• Communication
• Processing & Record keeping
• Payroll
No provision
Take advice
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Plan ahead
Budget
Engage your staff
Communication
Processing & Record keeping
Payroll
About Q&A People Matter
Q&A People Matter has a comprehensive range of global
services that provides a “one stop shop” solution for a
company’s personnel and management, legal and
employee benefit needs.
We pride ourselves on being forward thinking and
creative.
Together with our Alliance Partners we have a wealth of
knowledge and experience in the HR and Employee
Benefits arena.
Floor 34
Euston Tower
286 Euston Road
London
NW1 3DP
Longdene House
Hedgehog Lane
Haslemere, Surrey
GU27 2PH
Mollfort House
Kintyre Suite,
Water Street, Ramsey,
Isle of Man, IM8 1JP
Dubai World Centre
Dubai
UAE
T: +44 (0) 845 4704818
F: +44 (0) 845 4705018
[email protected]
www.qnapm.com