Presentation Transcript

1. The Automatic Enrolment Challenge www.qnapm.com Neil Mutton
2. - Current statistics- Whatis the pending demand ?- Planning for success- Pension Scheme options - Complianceand Record Keeping solutions What will be answered in this session
3. Some statistics 10,000employers ….. have registered 3.2meligible jobholders have been enrolled for first time 7.7mworkers were already active members of QWPS 82%of small employers have some awareness 49% of small employers don’t know when to act 75% of ‘micro’ employers don’t know their staging date Source: The Pension Regulator Mar 2014
4. Some more statistics 105 Days to implement Automatic enrolment 3.5Days per month to input data 33New administrative tasks per month 384 Adviser inputs into the research process 93Questions need to be answered by Employers 254Pages of Regulator guidance 394Pages of software guidance for developers Sources: The Pension Regulator Mar 2014 CEBR report, YES guide
5. Auto Enrolment is a complex Project Plan ! Employee Benefits Finance / Budgeting HR / Contracts, Handbooks Payroll / Complexity & Process Communication & Education Staff Reward and Motivation Timelines , Milestones, Deliverables
6. Staging profile (volumes of employers) Source: The Pension Regulator, Feb 2014
7. In Summary Automatic Enrolmentlegislation give employers a duty to: Automatically enrol all Eligible Jobholders Communicate to workers providing timely and appropriate information Allow Non Eligible Jobholders to Opt-in and Entitled Workers to Join Facilitate Opt Outs within the opt out period and promptly refund contributions Automatically re-enrol all eligible jobholders every three years Complete registration with the Pensions Regulator Keep records Maintain contributions Employers : Must notinduce workers to opt out or cease membership of a scheme Must not indicate to a potential jobholder that their decision to opt out will affect the outcome of the recruitment process
8. 3 Steps to Heaven… 8 Steps to Auto-enrolment
9. Advanced Planning is key to success Design(Strategy) Implement Run
10. Assessing your workforce Eligible Jobholders Aged between 22 and State Pension Age Have ‘qualifying earnings’ in the Pay Reference Period
11. Thresholds v Pay Reference Periods (PRP) 2014-15 †For other PRP durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00) or number of months by the monthly amount (eg £833.00) etc - or pro-rata if not an exact multiple of any of the above. N.B. The Secretary of State will review these figures each tax year.
12. Assessing your workforce Non-Eligible Jobholders Can choose to ‘opt-in’ Employers must then enrol them and make contributions
13. Assessing your workforce Entitled Age 16 – 74 Earning < £5,772 The employer does not have to make contributions for them Does not have to be the scheme approved for AE
14. Phasing the minimum contributions: Now - 2018 2% 5% 8%+ Defined contribution 1% employee contribution 3% employee contribution 5% employee contribution 2% employer contribution Defined contribution 1% employer contribution 3% employer contribution Staging period October 2012 October 2017 October 2018
15. Can Employers Postpone ? Postponement suspends the duty of automatic enrolment and the need to assess. Can be from 1 day up to maximum of 3 months - and can vary by individual. The employer must notify any postponed worker within 6 weeks. The worker has the right to Opt In or Join during postponement. So the pension scheme still has to be set up on the staging date !
16. Workforce assessment: “Qualifying Earnings basis” 2014/15 tax year £41,865 £36,093 £10,000 .. The trigger for Auto-enrolment £5,772
17. “Qualifying earnings” As basis for Pensionable earnings Jim earns £64,000 Jim’s qualifying earnings will be: £41,865 - £5,772 = £36,093 2% minimum contributions = £721.86 pa 1% from the Employer = £360.93 pa
18. “Certification” options as basis for pensionable earnings
19. Which pension scheme provider is best ?Does it matter ?
20. Employee Benefits Strategy & Budget SIPP ? Personal Pension ? Same scheme for everyone ? Same % contribution for everyone ?
21. What is N.E.S.T. ?(National Employment Savings Trust) Trust-based DC scheme A ‘default’ QWPS NEST accepts allemployers Individuals’ pots can move with themNEST do not give advice NEST does not provide compliance assistance
22. How will higher demand affect the Providers ? Interest registered months before ‘Staging Date’ Based on “Minimum average contributions” Thus some providers may say ‘No’ if:- They are contacted too close to a staging date Average contributions will be too low for them Your clients need to start planning early !
23. HR considerations Recruitment conduct Probationary Periods Employment contracts Offer letters Policies / deduction of wages clauses … Data protection (sending data to 3rd party pension providers)
24. How & when to communicate to workers Communications must be direct (e.g. letter, e-mail, payslip, HR web-portal). At staging, need to communicate to all workers, even scheme members. Need to inform of rights the first time† a worker becomes a particular category
25. Opting Out Timescales surrounding automatic enrolment and opting out Don’t forget to re-enrol Opt-outs 3 years after Opting out
26. Getting it wrong …. & ….Compliance & Record Keeping
27. tPR: Powers & Penalties Escalating penalty Workers Penalty per day 1-4 £50 5-49 £500 50-249 £2,500 250-499 £5,000 500+ £10,000 Persistent/Deliberate Offenders Fixed penalty £400 Prohibited recruitment conduct Workers Fixed penalty 1-4 £1,000 5-49 £1,500 50-249 £2,500 250+ £5,000 Third parties £200 per day escalating (up to £50,000)
28. Record Keeping Employers,….., must keep records about their workers and the pension scheme used to comply with the employer duties. An employer can use electronic or paper filing systems ………………………. ……..as long as these records are legible or can be produced in a legible way. Most records must be kept for six years; …. those that relate to opting out must be kept for four years. The records must be produced to The Pensions Regulator, if requested. The Pensions Regulator can conduct an inspection if they have reasonable grounds to do so (e.g. if there is a Whistleblower).
29. Data to be kept by employers Data will need to be kept for: Workers who become scheme members (e.g. Name, DoB, NI number†, gross qualifying earnings, contributions paid). Plus, for Jobholders only: Date of automatic enrolment or the original format Opt In notice; Contributions entitled to under scheme rules. Plus, for Entitled Workers only: Date with effect from which the worker became an active member; The original format Joining Notice. All workers for whom the employer has used postponement:(Name, NI number†, date the notice was sent to the worker). Details of the pension scheme(s)†† used: EPSR (Employer Pension Scheme Reference); Any evidence showing that a scheme is a Qualifying Scheme; Pension provider / scheme name & address. † where one exists†† data also to be kept by pension scheme provider
30. Options to manage Complianceand record keeping Manual administration Payroll software Accounting software HR software Bespoke Middleware Functionality ? Time ? Costs ?
31. How does an Employer choose ? Complexity of the business Existing software (Payroll / HR etc) Pension scheme provider solution exist ? Bespoke Middleware ? Functionality comparison of each option Cost comparison of each option The employer duties must be delivered
32. Middleware: Links with any/all external systems
33. In Summary
34. Cost / Budget elements Cost of designing/planning your Employers scheme Cost of implementing:- Pension scheme(s) / contributions Communication to / Educating staff Cost of Running the scheme Pension contributions Compliance & Administration
35. No provision Existing Provision Take advice Are you compliant ? Eligibility ? Contribution structure ? Project Plan Budget Engage your staff Communication Processing & Record keeping Payroll Take advice Plan ahead Budget Engage your staff Communication Processing & Record keeping Payroll
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