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MERCER WEBCAST

WEBCASTAUTO-ENROLMENT:A GUIDE FOR SMEs4 NOVEMBER 2015

Craig Haines & Giles CraddockElect by Mercer Marsh Benefits

Bristol

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What we’ll cover today

• Introduction

• Who we are

• Objectives for today

• Auto-enrolment - getting it right

• Your questions

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Who we areElect Employee Benefits

• The small business benefits specialist

• Benefits designed with smaller size groups in mind

• Enhanced benefits normally only available to larger groups

• We are part of Mercer Marsh Benefits• A global consulting leader

in talent, health, retirement,and investments

• 20,000+ employees• Operations in over 140 countries

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What we want you to take away

An understanding of what auto-enrolment is and how yourbusiness will be affected

An awareness of the key things to consider when thinking aboutauto-enrolling

Ideas about how to start planning for auto-enrolment to makesure you select the right solution.

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What is auto-enrolment?An overview

• The government introduced a law starting in October 2012 to make it easier forpeople to save for their retirement.

• It requires all employers to enrol their staff into a workplace pension scheme.

• Both the employer and the employee will have to contribute a minimumfinancial amount.

• The Pensions Regulator has released detailed guidance on employers’ duties.

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When will it apply to me?

Employer size(by PAYE scheme size) or otherdescription

Automatic enrolment duty date

From To

To 250 or more Employees 1 October 2012 1 February 2014

50 to 249 Employees 1 April 2014 1 April 2015

30 to 49 Employees 1 August 2015 1 October 2015

Less than 30 Employees (dependent onPAYE reference number) 1 June 2015 1 April 2017

Employers without PAYE schemes 1 April 2017 ---

The staging date is the date on which employers need to enrol ‘eligible jobholders’ andstart making contributions to a ‘qualifying scheme’. This is based on employer size, asmeasured by the number of employees on the PAYE payroll.

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Postponement

• What is it?– Postponement allows you to defer your first assessment

of some or all of your employees for a period of up to 3 months.

• The story so far– From July 2012 to March 2015, 51.7% of employers elected to postpone

the process of assessing their workforce for auto-enrolment purposes*.Within the last year.

• Things to be aware of- Employees can still opt in.- You need to issue a postponement letter to everyone.- Really need a scheme in place

*The Pensions Regulator - Automatic enrolment – Commentary and analysis: April 2014 – March 2015

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Who should I auto-enrol?

Earnings *

Age (inclusive)

16-21 22 – SPA ** SPA**– 74

Under lower earnings threshold (£5,824) Entitled worker

Between £5,824 - £10,000 Non-eligible jobholder

Over earnings trigger for automatic enrolment(£10,000)

Non-eligiblejobholder

Eligiblejobholder

Non-eligiblejobholder

* All earnings figures are in 2014/15 terms** State Pension Age

Entitled workers: Can ask to opt in. Company not required to contribute.

Non-eligible jobholder: Can ask to opt-in and Company must pay contributions.

Eligible jobholder: Company must auto-enrol and then pay contributions.

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How much do I have to contribute?Contributions and certification

*Pensionable Earnings under Set 2 must be greater than Basic Salary and at least 85% of total earnings across the scheme

**Experience of Aegon, a pension provider

Minimumcontributions Requirements for self certifying

Salarydefinition

Qualifying earnings(£5,824 to £42,385

in 2015/16)Basic salary Pensionable

Earnings * Total earnings

ContributionTotal Contribution

8%(Min. Employer 3%)

Total 9%(Min. Employer

4%)

Total 8%(Min. Employer

3%)Total 7%

(Min. Employer 3%)

Experienceso far** 20% 25% 40% 15%

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Phasing

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Minimumcontributions

Minimum self-certification requirements

Set 1 Set 2 Set 3

Salary definitionQualifying Earnings*

(£5,824 p.a. and£42,385 in 2015/16)

Basic salary Pensionablesalary** Total earnings

Contributions fromStaging Date

Total 2%Employer min. 1%




Contributions from1 October 2017





Contributions from1 October 2018





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Statutory communication

• What you need to send- Write to your staff individually after your staging date, telling them

about the pension plan you’ve chosen and how auto-enrolmentapplies to them.

- If you are postponing confirm this to staff in a letter.

• Who you need to send it to- Employees who are not currently in a qualifying pension scheme

pension scheme.

• When you need to send it- When you are enrolling staff.- When you are issuing a postponement notice.

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Electronice-community

Emails

Offline/PaperBespoke literature including

“your” logoPosters

Desk drops/FlyersQR codes will be included

Face-to-faceMember presentations(webcasts can also be

recorded) StatutoryCommunication

Postponementletters

Enrolmentletters

Opt out letters

Seasonalcommunications

Helps staff think aboutwhat they are getting

Engaging employees

OnlineWebinarsSurveys

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Opting out

• What is it?- Employees have the right to opt out of the pension scheme.

• The story so far- The DWP was initially expecting the opt-out rate to be 30% but research

shows opt outs were running at 12%.

• Things to be aware of- Inducement and prohibitive recruitment.

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Declaration of compliance

• What is it- Demonstrates that you have complied with the legislation.

• The story so far- Only 67% of ‘small’ employers(5-49 employees) an 59% of ‘micro’ employers

(1-4 employees) were aware they need to complete a declaration*.

• Where you need to do it- Employers have 5 months from their staging date to complete their declaration.


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Ongoing responsibilitiesDuties after your staging date

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Assessstaff

Enrol andre-enrol

employees

Manageopt outs

Keep andmaintainrecords

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• Not giving enough time to it.

• Not knowing your people

• Using an adviser to help with auto-enrolment decisions.

• Lack of or poor quality employee data.

• Not understanding postponement.

Staying on targetThe common pitfalls

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What if I don’t do it?

In the year ending March 2015 the TPR issued:

• 1682 compliance notices

• 22 unpaid contribution notices

• 30 statutory demands

• 6 statutory inspection notices

• 424 fixed penalty notices

• 5 escalating penalty notices

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“As the number of employers staging risessignificantly, we expect to see an increase in

how often we need to use our statutory powers.

This expectation is based on our researchamong small and micro employers, which shows

that these employers are more likely to leaveautomatic enrolment preparations until closer to

their staging date, or indeed until after theirstaging date, and therefore risk being non-

compliant with their duties.”

The PensionsRegulator

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Getting started

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• What you need to do to get started?

• Do you need help doing it?

• How will you assess your employees?

• Can you use your current scheme?

• What's it going to cost?

• How will it affect your market position?


“68% of employers expect touse an advisor to providepractical assistance withautomatic enrolment.*”

The PensionsRegulator

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How can we help?

• Review your existing scheme to make sure its fit for purpose.

• Identify what you need to do to make sure you get auto-enrolment right.

• Help you engage with your staff to make sure you are getting a returnon your investment.

• Call us: 0800 0232 785

• Email: [email protected]

• Visit: www.electemployeebenefits.co.uk

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Questions

Giles Craddock Craig Haines

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