Transcript What is Auto-enrolment?

Auto-enrolment for
workplace pensions
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What employers
need to know
Viv Ray – Deputy Pensions Manager
Emma Shand – Employer Liaison Officer
• Auto-enrolment
• Devon Pension Services Website
• Questions
Auto-enrolment
Viv Ray
(Deputy Pensions Manager)
Auto-enrolment
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What is Auto-enrolment?
Who has to be auto-enrolled?
Opting-out and refunds
Staging date
Postponement and Transitional Period
What an employer must consider
Useful web addresses
Auto-enrolment
What is Auto-enrolment?
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Government initiative to encourage all workers to pay into pensions
saving scheme.
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All eligible workers must be auto-enrolled into a qualifying workplace
pension scheme (QWPS).
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Auto-enrolment will be phased in over 6 year period starting in October
2012 with the larger employers first.
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Government will set up qualifying savings scheme called NEST (National
Employment Savings Trust) for those employers who don’t have their
own pension arrangement. (NEST does not apply to eligible LGPS
employees)
Auto-enrolment
Qualifying schemes
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Need to ensure minimum level of benefits payable to employee.
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Local Government Pension Scheme (LGPS) will be a qualifying scheme.
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Employers must pay a minimum level of contribution (this is already
achieved in LGPS).
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No change for existing members (regulations will need slight tweaking).
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As now, eligible employees will be automatically enrolled in LGPS,
however, they will not be able to opt-out before commencing
employment as they can now.
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LGPS employers cannot choose any other qualifying workplace
pension scheme (QWPS).
Auto-enrolment
Who has to be auto-enrolled?
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Those not in Qualifying Workplace Pension Scheme (QWPS) and
Age 22 or over and
Under State Pension Age and
Earn at least £8,105 p.a. (personal tax allowance 2012/13) and
Work in the UK.
If previously opted-out, must be re-enrolled every 3 years.
When employee meets age and pay criteria.
Includes part-time teachers already in TPS as full-time teacher, and reemployed ill-health teachers who retired before April 1997.
However, all employees already automatically join LGPS
Auto-enrolment
Three categories of Workers
Age
16 – 21
22 – under
State Pension Age
State Pension
Age – 74
Earnings *
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Under lower earnings threshold (£5,564 p.a. )
Between £5,564
Entitled jobholder
 and £8,105 p.a. f
Over earnings trigger for automatic enrolment (£8,105
p.a.f)
Non-eligible jobholder
Non-eligible
jobholder
Eligible jobholder
Non-eligible
jobholder
*Earnings: separate contracts treated separately
 To align with National Insurance contributions lower earnings limit
f To align with the PAYE threshold
The Secretary of State will review the above figures each tax year and the figures for 2013/14 should be
announced in November 2012.
EARNINGS – For definition of relevant earnings for Auto Enrolment go to the Pensions Regulators guide – this will not be the
same as pensionable earnings.
Auto-enrolment
Qualifying earnings to assess worker category:
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Salary or wages
Commission
Bonuses
Overtime
Statutory sick pay
Statutory maternity pay
Ordinary or additional statutory paternity pay
Statutory adoption pay
Go to the Pensions Regulators guide on ‘Assessing the Workforce’ for full
details on qualifying earnings
Auto-enrolment
Staging date
Staging is being introduced over a 5-year period starting in October 2012
Date of staging is determined by size of employer in April 2012
Size of employer
Staging date timetable
Larger Employer (Over 249 employees)
October 2012 – March 2014
Medium Employer (50 – 249 employees)
April 2014 – April 2015
Smaller Employer – (Under 50 employees)
June 2015 – April 2017
New Employer since April 2012
May 2017 – February 2018
Small employer (Under 50 employees) with
same PAYE ref as bigger employer, can choose
later staging date
August 2015 – April 2017
Existing employee only
New and existing employee
Transitional period can be used for existing eligible
jobholders to join in October 2017
Employer can postpone
auto-enrolment date by up to 3 months
Employee can opt-in at anytime from original staging date
Auto-enrolment
Communication with employees
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At Staging date all members of the LGPS must be given information
about the scheme
Those existing employees who you are automatically enrolling into the
LGPS must be provided with information on enrolment, including the
contributions and their right to opt out
Those existing employees who are not eligible jobholders must be told
how they can opt in to the LGPS
If an employer chooses to use the Transitional Period or
Postponement then effected employees must be written to with
details.
All new employees must receive the appropriate letter on starting
employment.
There is specific information that each type of employee must receive
(see template letters on website)
There are deadlines for communicating the required information to
employees. (see flowcharts on website)
Auto-enrolment
Postponement
 Employer can choose to postpone staging date by up to 3
months.
 To comply with LGPS regulations employers must use 3
month postponement period for employees on a contract of
less than 3 months.
 Will need to use postponement for all NOMO employees and
send relevant information EVERY time they work, suggest
amending claim form/timesheet to include this.
 LGPS regulations have been amended from 1 October 2012
to allow employees on a less than 3 month contract to opt in
before 3 months.
 At original staging date employees on a less than 3 month
contract will need individual postponement date and letter.
Auto-enrolment
Transitional period
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Employer can choose to use transitional period which defers staging date
for all or any existing eligible jobholders to 1st October 2017.
To comply with LGPS regulations will still need to enrol those with
contracts of less than 3 months who have their contract extended to 3
months and longer.
Employer will need to write to existing eligible jobholders to advise of
transitional period.
Employee can still opt in at anytime during transitional period.
During transitional period will still need to enrol existing employees who
become an eligible jobholder for the first time.
New employees will continue to be contractually enrolled in the LGPS.
Auto-enrolment
Opting out and refunds
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Employer inducement and coercion rules apply since 1 July 2012
Once an employee has been auto-enrolled they can opt-out of the
LGPS within the first month and receive a refund of their contributions
if applicable through payroll.
Employer’s contributions will be adjusted when next payment due.
Employee can only obtain opting-out form from Pension Section once
they have been auto-enrolled and not before. The form will be
available on the website for employees to download.
Employers cannot provide opting-out forms.
LGPS regulations currently permit refund of contributions if less than 3
months service.
Opted-out employees will automatically be re-enrolled at least every 3
years from Staging Date.
Auto-enrolment
What must an employer consider!
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Must ensure that auto-enrolment rules are complied with, this overall
responsibility cannot be passed to outside HR/Payroll provider.
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Need to ensure outside HR/Payroll systems provider are able to produce
all necessary reports.
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HR/Payroll systems will need to store all relevant information on eligibility
and opting-out. (Retain for minimum 6 years).
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Employer will need to provide all employees with written information on
auto-enrolment, even for those who are already members of the LGPS.
(Letter templates available on website)
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Auto-enrolment
What must an employer consider!
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Clear audit trail to show that you meet your obligations.
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Employer must have a robust procedure for informing Pension Section
of new joiners and those who subsequently opt-out.
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Assess estimated costs of changes and extra employer contributions,
although some will opt out.
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Make allowance in budget for these additional costs.
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Certify and register the QWPS with the Pensions Regulator.
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Consider using Postponement and/or Transitional Period.
Auto-enrolment
Regulation changes from 1st October
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Employees with contract for less than 3 months can now opt to join the
LGPS. Employer must inform these employees of this choice.
Employers must no longer give new employees option form to join or
not join.
Employees can only opt out of the LGPS once they have joined the
LGPS and not before.
Employer must NOT give opt out form to employee. Forms can be
obtained from Devon Pension Services or website to download.
Employee can opt out before pension contributions have been
deducted and therefore a refund would not be required.
No change to opt out procedure – refund through payroll still available
in first 3 months of employment.
New opting out form to be made available from January 2013 for all
employees
Auto-enrolment
What information is available on our website?
• Employers Guide specifically for LGPS employers participating in
the Devon Pension fund
• Flowcharts to help employers understand the process for their
workers
• Template letters to help employers with the statutory information
that each employee must receive.
• Links to relevant webpages
Auto-enrolment
Any questions?
Auto-enrolment
Useful web addresses
Pensions Regulator
www.thepensionsregulator.gov.uk
Department of Work and Pensions
www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms/
Devon Pension Services
www.devonpensions.org
Contact info
Web
www.devonpensions.org
www.lge.gov.uk
www.lgps.org.uk
Email
[email protected]
[email protected]
[email protected]