Transcript Auto-enrolment & Personal Accounts

The Automatic Enrolment Challenge
Neil Mutton
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
Some statistics
10,000 employers ….. have registered
3.2m eligible jobholders have been enrolled for first time
7.7m workers were already active members of QWPS
82% of small employers have some awareness
49% of small employers don’t know when to act
75% of ‘micro’ employers don’t know their staging date
Source: The Pension Regulator Mar 2014
Some more statistics
105 Days to implement Automatic enrolment
3.5 Days per month to input data
33 New administrative tasks per month
384 Adviser inputs into the research process
93 Questions need to be answered by Employers
254 Pages of Regulator guidance
394 Pages of software guidance for developers
Sources: The Pension Regulator Mar 2014
CEBR report, YES guide
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
3 Steps to Heaven…
8 Steps to Auto-enrolment
Advanced Planning is key to success
Design
(Strategy)
Implement
Run
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’
•
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
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
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 !
Workforce assessment: “Qualifying Earnings basis”
2014/15 tax year
£41,865
£36,093
£10,000 .. The trigger for Auto-enrolment
£5,772
“Qualifying earnings”
As basis for Pensionable earnings
 Jim earns £64,000
 Jim’s qualifying earnings will be:
£41,865 - £5,772 = £36,093
2% minimum contributions = £721.86 pa
1% from the Employer = £360.93 pa
“Certification” options as basis for pensionable earnings
Which pension scheme provider is best ?
Does it matter ?
Employee Benefits Strategy & Budget
SIPP ?
Personal Pension ?
Executives
Senior
Management
Junior
Management
Junior
Management
Workers
Workers
Same scheme for everyone ?
Same % contribution for everyone ?
What is N.E.S.T. ?
(National Employment Savings Trust)
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Trust-based DC scheme
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A ‘default’ QWPS
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NEST accepts all employers
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Individuals’ pots can move with them
NEST do not give advice
NEST does not provide compliance assistance
How will higher demand affect the Providers ?
• Interest registered months before ‘Staging Date’
• Based on “Minimum average contributions”
• Thus some providers may say ‘No’ if:• They are contacted too close to a staging date
• Average contributions will be too low for them
Your clients need to start planning early !
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
Opting Out
Timescales surrounding automatic enrolment and opting out
Don’t forget to re-enrol Opt-outs 3 years after Opting out
Getting it wrong ….
&
….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.
†
††
where one exists
data also to be kept by pension scheme provider
Options to manage Compliance
and record keeping
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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
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
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.
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