Workplace PensionsEmployers

What is Pensions Auto-Enrolment?

• Auto-Enrolment affects all businesses with at least 1 employee

• Commenced October 2012, and phased in depending on the size of the employer

• All eligible workers need to be automatically enrolled

• Mandatory minimum contributions from employer and employee

Role of Employers

• Payroll system changes may be required• HR requirements• Employers duties could be

– Time consuming– Complex to manage– Costly to administer

Preparation is essential

Compliance Requirements for the Employer

Employers will be required to do the following:

• Assess - Eligibility of all employees

• Register - With the regulator

• Comply - Ensure that pension schemes comply with all regulations

• Manage – Manage the enrolment process for all employees

• Update - Manage and update the opting in and out of employees

• Contributions - Manage contributions

• Inducements - Ensure that inducements to opt out are not offered

• Communications - Provide regular updates and employee communications

• Re-enrol - Re-enrol opted out employees on a regular basis

• Records - Keep accurate records of all the above.

Failure to Comply

• Auto-Enrolment is NOT optional

• If an employer does not comply– Fixed Penalty Notice £400

• Persistent offenders will have escalating fines– 5-49 employees up to £500 per day– 50-249 employees up to £2,500 per day– 250-499 employees up £5,000 per day

• The TPR has increased its enforcement action four-fold

Why is this happening?

• Only 56% of people of working age are making enough provision for their retirement

• 20% are saving nothing in 2015• Many are dependent on a state funded

retirement• The State Pension currently provides just over

£17 / day• State Retirement age continues to increase

Source: Scottish Widows Retirement Report 2015

The 8 Key steps

1 • Staging Date Analysis

2 • Assessment of Workforce

3 • Analysis of Existing Scheme

4 • Communication of Changes

5 • Auto-Enrolment of All Eligible employees

6 • Commencement of Contributions and Administrations of Payments

7 • Registration with the TPR

8 • On-going Management, Reporting, Admin and Storage

Knowing your staging date

Employees Date

90-159 01-May-14

62-89 01-Jul-14

61 01-Aug-14

60 01-Oct-14

59 01-Nov-14

58 01-Jan-15

54-57 01-Mar-15

50-53 01-Apr-15

Test for fewer than 30 01-Jun-15 To 30-Jun-15

30-49 01-Aug-15 To 01-Oct-15

Fewer than 30 01-Jan-16 To 01-Apr-17

Your staging date is determined by the payroll run from April 2012

Contribution rates

Staging period Employer Employee Tax relief Total

Oct 2012 to Mar 2018 1% 0.8% 0.2% 2%

Apr 2018 to Mar 2019 2% 2.4% 0.6% 5%

Apr 2019 onwards 3% 4% 1% 8%

Total Contribution Employer contribution Pensionable Pay

9% of pensionable pay 4% No quality test required

8% of pensionable pay 3% Pensionable pay is at least 85% of the total pay bill for the workers

7% of pay 3% All pay is pensionable

Minimum employer / employee contributions

Assessment of Workforce

Figures correct as of 2016/2017. *SPA, State Pension Age1 If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions2 If they ask to be put into a pension scheme, you must put them in your automatic enrolment pension scheme and pay regular contributions3 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.

Yearly gross earnings

AgeMonthly Gross

Earnings

From 16 to 21 From 22 to SPA* From SPA to 74

£5,824 and below Has a right to join a pension scheme 1 £485 and below

Over £5,824 up to £10,000

Has a right to opt in 2Over £485 up to

£833

Over £10,000Has a right to opt

in Automatically

enrol 3Has a right to opt in

Over £833

Qualifying Workplace Pension Scheme (QWPS)

What makes a qualifying scheme?• Can staff automatically opt in?• Does the scheme have a “default” investment option?• Does it have an opt out facility?• Does it meet one of the minimum contribution tests?

CommunicationInform - inform all workers

Information - The correct information at the right time

Communication - On an individual basis, in writing, of changes and

how they affect them

Inducement – Employer cannot offer inducement or advice

The key principles for successful communication include:Control - Ensure employees feel in control

Clarity – Ensure employees understand the benefits to them

Relevance - Tailor the information to each employee group

Language - Present information in comprehensible language

Repeating – Repeat information consistently across different channels

Questions - Allow opportunities for conversations and questions

Understanding - Ensure all relevant parties understand what role they

play and have the necessary information to fulfil that role.

Auto Enrolment of ALL eligible employees

Registration with the Pensions Regulator (tPR)

• Enrol all eligible employees on the staging date, even if they have previously declined membership

• It is the responsibility of the employee if they wish to opt out• Employers must not encourage employees to opt out

• You need to register with the pensions regulator within 4 months of your staging date

• You are able to register through a number of different online gateways;

- Government gateway

- Exchange – tPR’s online service

- Through the JFB system

Monitoring and Managing Records Data

The following need to be monitored;

• Opt-outs, opt-ins (on a monthly basis)

• Re-assess workforce (on a monthly basis)

• Wage increases

• Birthdays

• Retirees

• Contractors

• New joiners

• Potential Postponements

• Employees on probation

• Monitor Leavers

Important Information

HFB Financial Planning Ltd is an appointed representative of Intrinsic Financial Planning Limited andIntrinsic Mortgage Planning Limited, which is authorised and regulated by the Financial Conduct Authority.

Intrinsic Financial Planning Limited and Intrinsic Mortgage Planning Limited are entered on the FCAregister www.fca.org.uk/register/ under reference 440703 and 440718.

Intrinsic Financial Services Limited, registered in England No 5372217. Registered Office: Wiltshire Court, Farnsby Street, Swindon, SN1 5AH.

For most investments, the value and any income can go down as well as up, return is not guaranteed and the investor might not get back the amount of their original investment. If the product or fund invests overseas, this may in part be due to exchange rate variations. Most investments should be considered as a medium to long term commitment, meaning you should be prepared to hold them for at least 5 years. Additionally, the value of any tax benefits described depends on your individual circumstances. Tax rules may change in the future.

This information is based upon our understanding of current law and HMRC Revenue& Customers practice. Legislation and practice may change.