Don’t delay, enrol in the

The Fram Farmers Pension Scheme

Enabling Members to meet Auto Enrolment legislation with

a Fram Farmers Pension Scheme

PensionsAuto Enrolment

Your contacts

Please contact us if you have any queries about the Fram Farmers

Pension Scheme:

Fram Farmers:

Nick Hindle

Financial Controller

T: 01728 727700

E: nick.hindle@framfarmers.co.uk

Louise Tupman

HR Manager

T: 01728 727700

E: louise.tupman@framfarmers.co.uk

If you would like to contact One Pension Consultancy direct, please speak to:

Stephanie Windsor

Pension Advisor

T: 01206 331562

E: stephanie.windsor@onepc.co.uk

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Why should a Fram Farmers Member Business act now?

• Typically the start to finish process of setting up a compliant scheme can take 6-9 months.

• Not all existing pension schemes are auto enrolment compliant, and therefore employers must not

assume they are already covered.

• The fines for non compliance are significant; acting fast will aid you to ensure you do not receive

any financial penalties.

Why have Fram Farmers created a Member Scheme?

• To save members the considerable time required to understand the Auto Enrolment requirements

and to put a scheme in place for their staff.

• Fram Farmers have done this for our own staff and in doing so have travelled the road and under

stand what is required to put a scheme in place

• Because YOUR cooperative has created a scheme for YOUR farming business, we have done so

with YOUR best interests at heart.

What are Fram Farmers offering?

• We have partnered with a professional pensions consultancy, One Pension Consultancy, who will

work with Fram Farmers and you to guide you every step of the way.

• If you sign up to the Fram Farmers Auto Enrolment Scheme you will have peace of mind that your

scheme is:

• Legally complaint

• Well run

• A good scheme for you and your staff

• Overseen by your own, trusted and transparent Cooperative

• A sound choice for you to make in a complex and confusing pension environment

• Able to save you significant time and expense researching and setting up your own scheme

• You will be provided with your own secure, online web resource containing all of the key

documents you may wish to refer to.

• Your staff will have their own unique log in and password so that they alone can access their own

pension provision within the Fram Farmers Scheme.

Who is providing the pension products?

• Legal and General are a long standing and renowned provider of pensions.

• There are over 200 pension fund options available in the product range.

• Fully flexible scheme, members are able to move funds around should they wish.

• Ability to transfer both in and out.

What is Auto Enrolment?

The rules on Company Pension Schemes have changed dramatically.

Government legislation means all UK employers have to automatically

enrol their staff into a workplace pension. Therefore every workplace

pension must comply with the Pensions Regulator.

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How much will this cost me?

• Fram Farmers will charge members £125 per farming Business per year to be part of the scheme.

• One Pension Consultancy will charge £25 per member of staff per year.

• Each member of staff will pay an Annual Management Charge of 0.5% per year of their pension pot

to Legal & General.

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Who is providing the pension advice / guidance?

• One Pension Consultancy LLP is a market leading specialist provider of corporate financial advice

and services relating to pensions and other key employee benefits.

• Established in 2004, they service clients across the UK. 

• The partnership is authorised and regulated by the FCA.

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How does the Fram Farmers Scheme compare to otherschemes?

• It is fully auto enrolment compliant.

• We have a highly respected and trustworthy partner in One Pension Consultancy, leading this

scheme.

• Legal & General are a renowned and long standing provider of pension schemes, with good

returns on investment.

• Annual Management Charges from Legal & General are only 0.5% pa.

What happens if I do nothing?

• The government have imposed stringent rules, regulations and fines which mean a Company

cannot simply do nothing.

• The government will issue:

• A fixed penalty notice if you do not comply with statutory notices, or if there’s sufficient evidence of

a breach of the law. This is fixed at £400 and payable within a specific period.

• An escalating penalty notice for failure to comply with a statutory notice. This penalty has a

prescribed daily rate of between £50 - £10,000 depending on the number of staff you have.

• A civil penalty for cases where you fail to pay contributions due. This is a financial penalty of up to

£5,000 for individuals and up to £50,000 for organisations.

• A prohibited recruitment conduct penalty notice if you fail to comply with a compliance notice or

there is evidence of a breach. This penalty has a prescribed rate of £1,000 to £5,000 depending

on the number of staff you have.

• The government intends to fully recover all the penalties that they issue.

I’m interested, what do I do next?

• Find out your staging date – we can help you with this if needed.

• Contact One Pension Consultancy to discuss your options.

• One Pension Consultancy will guide you through the registration process.

• Your scheme will be set up with Legal & General.

• Once you reach your staging date your scheme will be active.

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Frequently Asked Questions:

What is NEST?

• NEST is a pension scheme set up by the government mainly to help employers with automatic

enrolment.

• It has an annual contribution limit that is different from other pension plans. The Nest annual

contribution limit is the maximum amount that can be contributed to any member’s retirement pot with

Nest in a tax year. The contribution limit for the 2014/15 tax year is £4,600. This figure will be adjusted

annually in line with average earnings. The limit would be a problem for anyone wishing to save more

than £4,600 into their pension scheme a year.

• Nest will not accept transfers in or out of the scheme except in very limited circumstances.

• Fram Farmers pension solution with Legal and General freely allows pension transfers into and out

of the plan.

Is there any way around the need to comply with the employer duties?

As an employer, you must comply with your duties. The Pensions Regulator will audit all companies

to make sure they are fulfilling their duties and there are substantial fines that may be levied against

companies that do not comply.

Will Fram Farmers fulfil all my employer duties?

No. Fram Farmers provides access to a pension plan and administration services so that pension

contributions from automatic enrolment can be paid and invested. However, there are employer

responsibilities that must be carried out that Fram Farmers will not undertake on your behalf such as

registration and completing the Declaration of Compliance. Fram Farmers will make sure you have

all the information you need to complete the Declaration but you as an employer will need to complete

this. Fram Farmers will provide you with templates for statutory communication and full instructions

but you will need to make sure the letters are issued to your employees. Fram Farmers provide an

administration service that will provide you with all the support you need to carry out these additional

duties.

Do I still have to comply with the employer responsibilities if I have an existingpension plan?

Yes. You still have employer duties even if you have a pension scheme that meets the minimum

requirements. We can help you review your current scheme.

What penalties will I face if I don’t comply?

The Pensions Regulator will check that all employers are complying with the new rules. If you are

found to be in breach of any of your responsibilities, you will be issued with a notice of enforcement.

You have the right to challenge that notice. According to the outcome of the investigation, a penalty

will apply. The penalty will very much depend on the nature of the breach, but for extreme cases could

be a daily fine of as much as £5,000 until you do comply.

When would an employer use postponement?

As an employer, you have the right to postpone the enrolment of your employees for three months

after the required commencement date of your scheme (also known as the ‘Staging Date’). This

can reduce your costs significantly. There may be other benefits too. You may want to use the

postponement facility for administrative reasons. For example, you may: need time to assess all of

your employees, prefer to align the enrolment of members with the payroll process, or avoid paying

part-month contributions, want to avoid having to assess employees who are with you temporarily, or

who have a one-off spike in earnings and would otherwise not qualify. You are also able to postpone

the enrolment of an employee for three months from the day they start with your company, or from

the date an existing employee becomes eligible to be automatically enrolled (for example, when the

employee reaches their 22nd birthday).

Is the set up and structure of your scheme easy to understand?

Yes! We have tried to make it as simple as possible, and will try to make the implementation and

administration of the scheme as straightforward as we can.

How do employees opt out?

It is an employer’s obligation under the new legislation that all employees are automatically enrolled

if they meet certain criteria. If an employee does not want to start saving right now they will need to

complete an opt-out notice. If they opt out within the first 30 days they will have their contributions

refunded and will need to contact Legal and General to do so. If an employee does opt out the

contributions from the employer will cease.

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Does everyone have to be automatically enrolled into a pension scheme?

Employees will be automatically enrolled into their employer's pension plan if they:

• are aged between 22 and State Pension Age and work or usually work in the UK and,

• earn more than £10,000 each year (for the 2014/15 tax year).

Any employees who don’t fall into these categories will not be automatically enrolled but will still be

entitled to join their employer's pension plan. However, whether you are required to contribute to their

pension plan will depend on their earnings and age. If an employee earns between £5,772 and

£10,000, and are aged between 16 and 74, you will be required to contribute. If they are aged

between 16 and 21 and State Pension Age and 74 with earning over £10,000 they can still join the

scheme if they wish but you will not need to contribute on their behalf. Please note these figures may

change from time to time.

What happens to the money employees have saved if they die before retirement?

When employees join a pension scheme, they will be asked to complete a ‘nomination of beneficiaries

form’. If they die before they retire, their pension savings will be paid to their nominated person(s)

usually as a tax-free lump sum. If the employee does not provide details of a beneficiary then benefits

will be paid at the Trustees discretion.

How will you ensure that the default investment strategy is appropriate nowand in the future?

Our Pension Advisers will keep a close eye on the default strategy and will make changes where and

when they are needed and in keeping with the legislative guidelines.

If employees join the scheme and move to another company what happens totheir savings?

When employee joins a new employer they may need to be automatically enrolled into the new

employer’s scheme. If they opt out of their new employer’s scheme they will no longer receive the

employer’s contribution. If their new employer uses Legal & General as a pension provider they may

be able to link their benefits together very easily. Otherwise they can either leave the money where

it is until they come to take the benefits. If the employee is aged 55 or over, they can take the benefits

straight away. Before an employee transfers from one scheme to another, it may be worth them

speaking to a financial adviser, as it’s not always the best course of action. Please note that the

government is reviewing the existing practice in this area.

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What format will the benefits take?

From April 2015, the way in which a pension member can access their pension funds at retirement

is changing. Based on current proposals, the options available will be as follows:

Option 1 – Purchase an annuity – fixed income

With this option the member can take up to 25% of their fund as a tax free lump sum. The remaining

75% is then used to secure an annuity. An annuity is a type of insurance policy which provides a

regular income which is usually payable for the rest of the member’s life. Individuals will be taxed on

the income they receive. The amount of the annuity a member will receive will depend upon a number

of factors such as how old the member is when they purchase the annuity and how much they have

in their pension pot and the options they select. Members don’t have to purchase an annuity with

their pension provider and can shop around and purchase a pension with any UK pension provider.

This is known as an Open Market Option.

Option 2 – Income Drawdown – flexible income

If a member selects Income Drawdown they can also take up to 25% of their fund value as a tax free

lump sum. The remaining 75% will continue to be invested in the fund, or funds, of their choice and

they can then draw an income from this as required. From April 2015 there will be no restrictions as

to how much income a member may take from the pension. Any income the member takes from the

pot will be subject to Income Tax. There is no minimum income that the member will need to withdraw

from their pension in this way so the member could decide to take their tax free lump sum and leave

the rest invested until a later date.

Option 3 – Take it all as cash

From April 2015, the member will be able to take the whole pension fund as a lump sum. The first

25% will be tax free with the remaining 75% subject to Income Tax. Members will need to consider

the impact taking the fund in this way will have on the amount of tax they pay during the tax year.

Option 4 – Take it out in segments

Member’s don’t have to take their whole pension out in one go, and can take it out in segments if

they wish. Each time they take money from their pension pot in this way, the first 25% will be tax free

with the remainder subject to Income Tax. As above, the member may wish to consider what impact

this will have on the tax you pay. Can employees take benefits and still carry on paying into their

pension? In most cases members can now continue to pay into a pension whilst drawing benefits.

However, they may need to establish a new policy in order to do so. It should be noted that if the

members takes any income via a new income drawdown established after April 2015 (Option 2 above)

or takes their pension as cash (Option 3 above), this may restrict the amount they can pay into their

pension to a maximum of £10,000 per annum. If members believe they may be impacted by this they

should seek advice.

Can employees take benefits and still carry on paying into their pension?

In most cases members can now continue to pay into a pension whilst drawing benefits. However,

they may need to establish a new policy in order to do so. It should be noted that if the members

takes any income via a new income drawdown established after April 2015 (Option 2 above) or takes

their pension as cash (Option 3 above), this may restrict the amount they can pay into their pension

to a maximum of £10,000 per annum. If members believe they may be impacted by this they should

seek advice.

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Fram Farmers Limited

Station Road, Framlingham, Woodbridge, Suffolk IP13 9EE

T: 01728 727700

E: mail@framfarmers.co.uk