welcome [] · auto enrolment a new law means that every employer must automatically enrol workers...
TRANSCRIPT
WelcomeHampshire Association
of Local Councils’ Workplace Pensions21st September 2015
John Le PoidevinMember of the Pensions Management Institute’s Auto Enrolment Accredited CPD Programme
Nationwide646 holders of this examination
Automatic Enrolment
The TeamJohn Le Poidevin
• 40 years in Financial Services• Director, IFA business 1990 to 2011• Compliance Officer 1995 to 2011• Pensions Specialist 1987 to date• Auto Enrolment Consultant
• PMI Certificates in Pensions Auto Enrolment• & Trustee Pensions Knowledge• tPR’s Trustee Toolkit Certificate • PMI Automatic Enrolment Accredited
CPD Programme.
Ian Batterbee • 24 years in financial services • Independent Financial Adviser• Contributor & development role -
Annuity Direct
• Pensions and consultancy roles in Norwich Union, Standard Life and Canada Life
• Dip Pfs Diploma in Financial Planning
Liam McCann • 25 years in Accounting Services• 15 years in the Civil Service• Payroll processes and procedures
• Member of the Chartered Institute of Management Accountants
• Business planning, budgeting and forecasting support for SMEs’
Ian Miles • 42 years in Procurement • Supply chain, procurement &
logistics Consultant• Practiced in large-scale change
management
• Supplier/client/stakeholder relations skills • CIPS• CIOB• ICM
value
additional
Staff
leavers ongoing
employees
changes
normal
pay
created
Schemes
choice
people
Support
Pay-out
cert
ain
use
government
tax
paid
receivesFunding
way
sStaff
provision
PensionPlans
Staging Date
enrol
finesThe Pensions Regulator
tPR
auto-enrolment
Law
unde
rsta
ndin
g
submissions
assessment
Non-eligible
Opt-out
Opt
-in
people
categories
QWPS
Qualifying W
orkplace Pension Scheme
cost
Planning
Com
mun
icat
ions
postpone
flexibility
future
secure
money
relax
£
safe
features
• Pensions Acts 2008 & 2011• Pension Reform• Workplace Pensions• Automatic Enrolment
Does it affect myCouncil?
Auto enrolment
A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:
• are aged between 22 and State Pension age• earn more than £10,000 a year• work in the UKThis is called ‘automatic enrolment’.
It will not affect you if…….
• Your Council employs fewer than one, (that is none)
• All Local council workers are Self Employed contractors,
• But……………….
• In accordance with HMRC rules Clerks and RFOs to local councils cannot be engaged as Self Employed contractors
The Pension Problem
• Ageing population• Prolonged period of low interest rates• Small employers less likely to provide pensions• Personal savings too small• Stakeholder Pension strategy failed
The Pension Solution
• Have an Earnings Related State Pension?• Privatise secondary pension provision• Tell Employers how much to pay• Tell Employees how much to pay• Provide a purpose built scheme
Then……………….
The Pension Solution
Make it unnecessarily complicated by giving choices• Allowing opt-outs after the event• Allowing Postponement, but employees can
say “No, I want to join now”• Excluding many current schemes• Assess eligibility on earnings of £10,000pa• Then calculate contributions on £5,824+*
*Capped at £42,385
What does this mean for local councils?
• May need a qualifying pension scheme, or have a process in place for installing one in a timely manner
• Must issue statutory communications within prescribed timescales
• Must monitor workers on an ongoing basis for changes in age and earnings
• Must submit a Declaration of Compliance to the Pensions Regulator and keep appropriate records
What else must we do?Monthly gross
earnings (2015/16) Age
16 – 21 22 – State Pension Age State Pension Age - 74
£486 and below ENTITLED WORKER
(If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions)
Over £486 up to £833 NON ELIGIBLE JOB HOLDER
(If they ask to be put into a pension scheme, you must put them in your qualifying pension scheme and pay regular contributions)
Over £833
NON ELIGIBLE JOB HOLDER
(If they ask to be put into a pension scheme, you must put them in
your qualifying pension scheme and pay regular
contributions)
ELIGIBLE JOBHOLDER (You must put these members of staff in
your automatic enrolment pension
scheme and pay regular contributions. You don’t need to ask
their permission)
NON ELIGIBLE JOB HOLDER
(If they ask to be put into a pension scheme, you must put them in
your qualifying pension scheme and pay regular
contributions)
DateEmployer minimum
contributionTotal minimum contribution
Before 30/09/2017 1%2%
(including 1% staff contribution)
01/10/2017 —30/09/2018
2%5%
(including 3% staff contribution)
01/10/2018 onwards
3%8%
(including 5% staff contribution)
Pay reference thresholds
2015 - 2016 Annual 1 week 1 month
Lower level of qualifying earnings
£5,824 £112 £486
Upper level of qualifying earnings
£42,385 £815 £3,532
How are we doing?
1. Why did we need pension reform2. When commentators refer to the capacity
crunch, what do they mean3. We have a pension scheme so we don’t need
to do anything. True or False?4. What happens to employees when they
reach State Pension Age?5. I’ve heard there is an Opt Out so that is what
we will do. Is that OK?
The FinesExtract from the Pensions Regulator Website
The table below illustrates the escalating penalties that might be applied to employers for breaches of their automatic enrolment duties.
Number ofemployees
Prescribed dailyrate
1 - 4 £505 - 49 £500
50 - 249 £2,500250 - 499 £5,000
500 + £10,000
Legislation breaches / non compliance will also invoke £400 Fixed Penaltywhere non compliance continues for each breach
Don’t Assume that…………
Five common misconceptions that Local Councils must avoid;
1. the chosen pension provider will do the work;2. the payroll provider will tell you all you need to do;3. the work will stop once staging has started;4. all staff must have a pension5. most people will opt-out anyway.
Source: Employers that have completed Staging as reported in Payroll World, 13th September 2013
Don’t Delay
Letter from DWP advising of Staging Date
Do you have a Pension Scheme?
Are all eligible employees members?
Is it a QWPS?
Yes
No Yes No
Can it be amended to QWPS?Yes No
Pension Scheme Required?
Yes No
Do I need help?
Have you communicated with your employees?
Have you assessed your
records for compliance?
Employer to install a Qualifying Workplace Pension Scheme
Fully Compliant and inform all employees
Automatically Enrol all employees on your Staging Date
Consider Postponement and decide on Deferment Date
Tier 1 Contribute on basic salary
Tier 2 Contribute on basic salary -
>85% of collective gross
Tier 3 Gross pay
3 Options available to Employers
Opt-in Opt-out
Non-Eligible
Entitled
Eligible job holder to contact Pension Administrator
Employer Contribution
Employer Optional
Contribution
Employee assessment required – essential for primary or
enhanced protection
Employee decision
Payroll
No Change
No ChangeChange
Run Payroll
Evaluate
Change
Evaluate
File Payroll Send to HMRC
Send to Pension Provider
EvaluateRe-Run Payroll
Have you Registered the scheme with the
TPR?
YesPension Provider to send file of Opt-Out
Evaluate Staff
The Pensions Regulator
• Everything you need to know on-line• They know your Staging Date• They have RTI returns• They know what to expect, after all,• They have set the framework
What should you expect?
• Every pension provider requires data in a different format
• Every Payroll system provides it in a different format
• Expect a cost for payroll to link to pension• Consider combining payroll and AE function
Watch out for……………...attempts to confuse you
When;
• Eligible means your employees are enrolled into your pension scheme without doing anything, the Automatic bit.
• They may Opt Out, but only after you have done the work to put them in.
• Non Eligible? Ah! Well…………………….
Watch out for…….potential misinterpretation
• Non Eligible means you are entitled to and eligible for a pension contribution from the council, but only if you ask to Opt In, in writing
• Entitled means you are not eligible and, well, not really entitled to very much.
• Entitled Workers may join the pension scheme, the council must deduct contributions from pay, it is not required to make an employer payment.
How are we doing?
1. How many employers have auto enrolled since 2012?
2. How many will auto enrol Jan to Mar 2016?3. How many from now to Oct 2018?4. Will it be more cost effective to call LGPS for
auto enrolment?5. “I’m already drawing a pension, please don’t
put me in another scheme”
You must….
• Assess your workforce• Issue appropriate communications• Within defined timescales• Auto Enrol EJs into a QWPS• Allow NEJs to Opt-In and pay contributions• Allow EJs to Opt-Out and pay refunds• Arrange for EWs to contribute
Do we need to set up a pension scheme if there are no eligible jobholders for automatic enrolment?”
• There is no need to have a pension scheme• However, if staff ask to go into a pension
scheme…• …the council will need to set up a scheme wef
1st day of following month• a local council has an ongoing duty to assess
all staff each time an employee is paid
You must….
• Keep records• Your council must keep records compliant with its
workplace pension duties, including:– the names and addresses of those enrolled – when contributions were paid – any opt-in and opt-out requests – its pension scheme reference or registry number – any information it sends to its pension provider
• for six years and opt-out notices for four years.
You may….
• Consider postponement initially
• And for new joiners after Staging Date
• From 1 day up to 3 months
• Pay more than the stipulated minimum
A QWPS could be…
• A Stakeholder Pension
• An Occupational Pension Trust
• A Master Trust, multiple employers
• A Group of Personal Pension Plans
• National Employment Savings Trust(NEST)
Watch out for…….
• Deductions Net or Gross from Net or Gross Pay
• Maternity Pay contributions may differ from GPP* to Occupational Schemes
• NEST differs from other Master Trusts
• Contribution Refunds for short service may be withdrawn in future legislation
• *GPP = Group Personal Pension
You must not….
• Encourage staff to Opt-Out X• Offer any inducements to Opt-Out X• Offer jobs to people who agree to Opt-Out X• Try to make employees Self Employed X• Pay less than the stipulated minimum X• Ignore Auto Enrolment X
What we do
differently to many
other advisors…
.
Enro
l My
Staf
f
IFA
Acco
unta
nt
Dire
ct
Insu
rer
Mas
ter T
rust
Nes
t
Payr
oll
Bure
au
Pre-Staging Consultancy P P O O O O O
Pension SchemeAdvice
Personal Pensions
Plan P P O O O O OMaster Trust P P O O O O O
Payroll Integration P O P O P P PData Testing P O O P P P PEmployee Communications P O O P P P ORegistration with the Pensions Regulator P O O O O O O
Ongoing Services
Pay-roll P O O O O P PPension P P O P P O O
What next?
If you don’t know your Staging Date;• Send your PAYE Ref Number to:
[email protected]• Provide staff list with DoB, gender, monthly
pay for a free report, includes status and contributions
• Contact Enrol My Staff for advice
Thank you, do you have any questions?
Enrol My Staffis a trading style of
The Enrolment Professionals LimitedFareham, Hampshire, PO14 3RP
t: 01329 559130e: [email protected]: www.enrolmystaff.co.uk