1. Thames Valley Pensions Conference Keeping control in challenging times Seacourt Tower, West Way, Oxford21 March 2012Adrian LambBlake Lapthorn

2. Thames Valley Pensions Conference 2012Agenda and timetable9.30 amIntroduction9.45 amWhat really worries me is 10.00 am Will I ever know what our liabilities really are? - Nicola Walker10.25 am Discrimination, equalisation and GMPs a personal experience!10.50 am Derisking what could we do tomorrow? What can we do today?- Richard Murphy11.15 am Coffee break11.35 am Making assets work smarter Kevin Frisby12.05 pm Auto enrolment and DC adequacy - Andrew Cheseldine12.35 pm The future of retirement Adrian Lamb12.45 pm Questions and open forum1.00 pmLunch! 3. Thames Valley Pensions Conference 2012 Health & safety and housekeeping! Packs and soft copy of slides Feedback forms Ask questions throughout Participate Challenge Enjoy 4. Thames Valley Pensions Conference 2012 YOU DONT HAVE TO BE MAD TO BE A TRUSTEE (OR INVOLVED WITH PENSIONS IN ANY WAY) - BUT IT HELPS 5. Thames Valley Pensions Conference 2012The Perfect Storm - revisited Volatile asset values Increasing liabilities Covenant and finance strains Are we out of the recessionary woods yet? 6. Alphabet soupSPA &DRATUPE & TEPPNESTDB and DCPIGS, PIIGS and PIIIGSBRICQEQE2QE3/4/5???MEGO? 7. C =ComplacencyCancer survival ratesCredit easingCruises?Current account trade balancesCardboardCells (Hayflick limit)CIVETSContributing more and for longer 8. Questions Is there such a thing as a risk free investment? Can I ever know what our liabilities really are? Data, what data? Can I do anything about this (other than pray)? Is there such a thing as an equity risk premium now or is it just an equity risk? Can I get smarter with my/our investment strategy? 9. More questionsWhat does it take to make DC adequate?What is adequate?Is it ever likely to be affordable?Is auto enrolment just a precursor to more tax?Can it work?What do we need to do?How can we cope with more older workers?Who can I blame?Can I sue anybody? 10. HOPE SPRINGS ETERNAL PLCMain site Roy Rovers Close, Melchester 11. Assessing Scheme liabilities. or falling down the rabbit hole Nicola Walker 12. Why worry?Sentence first, verdictafterwards 13. Danger areas Equalisation GMP equalisation Drafting problems Closure to future accrual Data Defined contribution or defined benefit? CPI/RPI 14. EqualisationDitto said Tweedledum.Ditto, ditto cried Tweedledee. 15. GMP Equalisation Were all mad here 16. Drafting problemsThen you should say what you mean, the March Hare went on.I do, Alice hastily replied;at least--at least I mean what I say--thats the same thing, you know. 17. Scheme closureBegin at the beginning and go on till you come to theend: then stop 18. Data It is wrong from beginning to end, said the Caterpillar 19. Defined benefit or defined contributionLet me see: four times five is twelve, and four times six is thirteen, and fourtimes seven isoh dear! I shall never get to twenty at that rate! 20. Government changes:CPI/RPI and Protected RightsCuriouser and curiouser! 21. How to be proactiveOh my ears and whiskers, how late its getting 22. Now, I give you fair warning, either you or yourhead must be off! 23. Thames Valley Pensions Conference 21 March 2012 Discrimination/equalisation and GMPs- What can I/should I be doing about them?adrian.lamb@bllaw.co.uk 24. Discrimination the different issuesAgeSexGMPs 25. Age Discrimination and scrapping thedefault retirement age flexible retirementNarrow sense Essentially, more flexibility over late retirement optionsDrawing benefits at 65 whilstcontinuing to workDrawing benefits at 65 whilstcontinuing to accrueNot drawing benefits at 65 butcontinuing to accrueWide sense Drawing benefits in different stages at any permitted age whilst continuing to accrueCombination of age discrimination andscrapping DRA but you still haveobjective justification! 26. What are employers doing at the moment? Money purchase schemes Continued employer contributions beyond age 65 Defined benefit schemes choice at 65 of: Continued accrual Immediate pension Late retirement uplift Can you offer a money purchase alternative at age 65? 27. Must you provide flexible retirement?Narrow Probably no exemption in age discrimination legislation for scheme provision that prevents accrual beyond 65 Indirect age discrimination risk if rules impose a leaving service requirement before pension can come into payment Objective justification likely to be difficultNo requirement outside of age discrimination legislation. Couldage discrimination be an issue?Wide Original DTI Guidance suggested an indirect discrimination risk: 28. Sex equality the legal background European law equal pay for men and women Barber case pensions are pay So equal treatment from 17 May 1990 Several cases since then on various aspects Requirement for equality on pensions enshrined in pensions law at s.62 Pensions Act 1995 (not in equality Act 2010 29. What does equal treatment for men and womenmean in a pensions context?Same benefits for same period of pensionable service Defined benefit = same accrual basis Defined contributions = same contribution ratesSame rights in relation to those benefits, e.g. if right to take form ago60 applies it applies to men and women in same categoryIn DB scheme this should mean pension for a man and woman onequal pay should be the same at the start (and should be the samethroughout?)For DC schemes at the moment no need to take account of differentannuity rates which produce unequal benefits for men and women!!! 30. Equal treatment some of the recent problemsChanges not effective, ie did not follow alteration powercorrectly Could mean the Barber gap is still open!!Not all terms and conditions applied equally, eg for stayers andleaversConfusion over what rights are affectedExpensive mistakesTime limits! 31. GMP Equalisation the issue(important even if it isnt that interesting!) In schemes where employees contracted out on a GMP basis, there are two elements to the pension the GMP (replacement for accrual under SERPS) and the excess over GMP Different rates of increase apply to the GMP and non-GMP elements Different rates of revaluation apply to the GMP and non-GMP elements of a deferred pension for an early leaver Revaluation of GMP applies up to SPA which is different for men and women (and possibly different from the Scheme NRD) Because GMP is a replacement for SERPS it has to be paid at the same time as SERPS would be paid 60 for a woman and 65 for a man So unequal payment dates, pensions and increases!!! 32. The Williamson case (1)a landmark overlooked? Williamson (an actuary!) complained to Ombudsman his benefits were lower than an equivalent female employee because unable to receive that part of his pension related to SERPS his GMP) until 65 but woman could take form age Compliant upheld but no directions given on how to best equalise GMP equalisation is a (deliberate) misnomer any equalisation is to other benefits to compensate for unequal GMPs Trustees and employer challenged on two grounds jurisdiction and correctness. Because Ombudsman lost on jurisdiction (technical) the correctness of his decision was not ruled on But. 33. The Williamson case (2) Ombudsman terminology probably wrong referred to GMP equalisation rather than equalised benefits to compensate for unequal GMPs Judge confirmed that GMPs in a pension scheme should be regarded as calculation factors rather than pensions in themselves Judge confirmed that members should in principle be allowed to complain about matters which brought about potential (not just actual) discrimination Judge also did not accept the broader arguments that s.62 did not require equalisation Judge all but supported the view that some action needed to be taken 34. The Pension Industrys view Too difficult! Ambivalence Thankless task Failure to get a consensus Hope it goes away 35. The Governments position [Schemes should] reflect the European law position on equal treatment of men and women as it applies in the field of occupational pensions, in so far as any differences result from the GMP provisions in the Pension Schemes Act 1993. Successive Governments have maintained the position that schemes are under an obligation to equalise overall scheme benefits accruing from 17 May 1990 including, in respect of accruals from 17 May 1990 to 5 April 1997, any inequality resulting from the GMP rules, where an opposite sex comparator existed in the scheme. as inequality resulting from the GMP rules results from state legislation, the requirement to remove any unfavourable treatment resulting from those rules is not subject to the requirement that an opposite sex comparator exists. 36. The Governments position The Government understands the current situation is that contracted-out schemes which hold GMP liabilities are already under an obligation to: equalise pensions for the effect of the GMP rules for anyaccruals from 17 May 1990 to 5 April 1997 (inclusive),apart from where the limited exceptions in the Equality Act2010 (Sex Equality Rule) (Exceptions) Regulations 2010apply. This flows from Barber and current domesticlegislation; and assume a comparator exists for the purposes of thisexercise. This flows from Allonby itself which imposes EUlaw obligations directly on schemes. 37. The Governments position It is a requirement Have taken advice Are only consulting on technical changes to bring UK law into line with European law PPF have also taken advice (but different considerations there as they pay compensation) Only one conclusion can be drawn from this the advice has made clear it has to be done One possible methodology published with consultation 38. The PPF . and insurance companiesCompensation, not pensions so law applies directlyPPF basis could be described as the best of both worldsThe members entitlement is the higher of the amount the member would get under the scheme rules in their own sex and the amount their opposite sex notional comparator would be paid.The comparison is undertaken each time the amount of pension in payment is calculated (generally annually) and the scheme pays the higher amount.Some insurers already insisting on it . and more will now?So affects schemes when buying out, buying in, and winding upCould affect liability reduction exercises, enhanced transfervalues, etc. 39. Administration and other issues The basis best of both worlds for members, the worst for the scheme? The administration!!! The communication!!!! Member confusion Past cases Materiality Cost Complexity 40. Conclusions Has to be done Directly applies to pension schemes so Trustees have to ensure compliance PPF is the default basis but other bases may be justifiable Rolls Royce, Mini, BMW (other car makes are available) Understand the costs benefits, administration and communication Administrator competence this wont be easy Governance/audit Endgame focus requires action 41. Blake Lapthorn Oxford Pensions ConferenceRichard Murphy 21 March 2012What to do today andtomorrow.44 42. AgendaUK plc Why are there DB pensions? DB liabilities in perspective The challenges for employers and trusteesSteps today or tomorrowCertainty from uncertainty 45 43. Why do employers have defined benefitpension schemes?HelpSmoothing ofoutcomeFlexibility of employees Cost effectiveRewardsbetweentiming onplan forsavingmembers and loyalty contributions retirementover time Simple for EfficientRewardsFlexibilityEmployees individuals targeting of high-flyers for HRlike them todeathunderstandbenefits 46 44. Pension risks and challengesBenefitInterestAsset LegislationInflation administrationratesperformance CorporateContingent Turnover of Solvency II Longevity bond benefitsemployeesfor pensionsspreads Salary Regulatory TrappedMember Communication growth bodies surplusoptions 47 45. The big picture80bnActive accruing - DBDCActive accrued - DB60bn DeferredsPensioners40bn20bn0bn 2012 2022 2032 2042 2052 2062 2072 20822092 Year 48 46. So where are we now? 4000bn 3500bn 3000bn 2500bn 2000bn 1500bn 1000bn500bn0bn Total benefit Assets TechnicalInsurancepaymentsprovisionspremium 49 47. How does it all fit together?A long-term plan for UK plc Pension SchemeProgressive buy-ins Insurance premium andtechnical provisions converge Insurance premium?TechnicalRPI to CPI? Liability provisionsmanagement Assets Non-cash funding solutionsAuto enrolment demands on employer cash flow 20122030 2060 50 48. Equities underperform liabilities by 21%Double whammy over the summer Equities (GBP, TR) vs Index-linked Gilts130120110100908070 31/12/2010 31/03/201130/06/201130/09/2011 31/12/2011Global Equities>5Yr ILG RelativeSource: Bloomberg5151 49. What can be done?By employersBy trustees 50. Government announcementsCPI might help a bit Annual increase in Retail and Consumer Prices Statutory minimum Indices (% pa) indexation switching from RPI to CPI Annual RPI inflation Annual CPI inflation Average long run difference 0.7% pa Increase (% pa) Might be increasing to 1.0% pa or moreSource: ONS data 53 51. Immediate change Impact on UK Plc Pension SchemeInsurers Projected benefit payments only just4000bnstarting toPensioners Deferreds Active accrued reduce3500bnReductionpremiums80bn3000bn of 360bnfor CPI60bn 2500bnReduction2000bn40bn of 73bn1500bn20bn 1000bn 500bn0bn 0bn2012 2032 2052 2072 2092Total benefitAssets TechnicalInsurance payments provisionspremiumYear 54 52. Probably my most important slide ofthe sessionThe importance of good dataRiskData issues Paying the wrongBenefits uncertain benefits Lost records Good Funding uncertaintydata Spouses benefits only Premium loading on required on the paper record insurance Unrecorded benefits ImpactCannot proceed with managing riskOver pay to reduce the riskUnexpected liabilities emerge 55 53. Pensioner buy-outs and buy-insOverview Equities37%57%Equities ResidualLiabilities Liabilities Bonds BondsInsurance PensionerPolicyLiabilitiesBeforeAfterFor buy-ins trustee (and company) gain exposure to insurers covenantLarger schemes have additional flexibility when structuring transactions56 54. Pensioner buy-in pricing 57 55. QuoteIt is currently the case that forpensioners insurance may becheaper than holding gilts.Pension Insurance Corporation 8 November 201158 56. Liability managementBuzzwords for Transfer value Member option to convert to a level exercise pension 8000Pension per year ()Settlement gain 6000Highervalue? Fair pension Enhancementnowto transfer4000 Pension valueFixed for liability 2000 lifetime Standard Transfer0Value 6570758085Age 59 57. Plugging the deficitAsset backed partnerships and the rest Parent companySponsoringPension guarantees employer schemeGRen Negative pledgesrtn dampa enter Pa miteer al reym al PstLienare tstn Triggers for additionalmer cocontributions In Scottish Limited PartnershipCharges over assets Cross-company PropertyContractsWhisky Brands guarantees60 58. Scope This generic presentation should not be relied upon for detailed advice or taken as an authoritative statement of the law. If you would like any assistance or further information, please contact the partner who normally advises you. While this document does not represent our advice, nevertheless it should not be passed to any third party without our formal written agreement.LCP is part of the Alexander Forbes Group, a leading independent provider of financial and risk services. Lane Clark & Peacock LLP is a limited liability partnership registered in Englandand Wales with registered number OC301436. LCP is a registered trademark in the UK (Regd. TM No 2315442) and in the EU (Regd. TM No 002935583). All partners are members ofLane Clark & Peacock LLP. A list of members names is available for inspection at 30 Old Burlington Street, London, W1S 3NN, the firms principal place of business and registered office.The firm is regulated by the Institute and Faculty of Actuaries in respect of a range of investment business activities. Locations in London, Winchester, Belgium, Switzerland, theNetherlands, Ireland and the UAE.61 59. Blake Lapthorn Oxford Pensions ConferenceKevin Frisby 21 March 2012Making your assets worksmarter.62 60. AgendaFiduciary Management for DB SchemesDC Scheme Investing Life-styling Default optionsLatest investment ideas Emerging market multi asset funds (EMMAFs) Diversified growth funds (DGFs) Switching triggers63 61. Fiduciary management for DB SchemesWhat is Implemented Consulting / Fiduciary Management?RationaleMarket providersPros and cons 62. Running a pension schemeHow hard can it be? 1,000m (0m)(1,000m)Surplus (Deficit)(2,000m)(3,000m)(4,000m)(5,000m)1111 1110 11 11111 111 11 r1 l1 n barnec aypgct Ju Ap Ja FeJuSeAuOM DM313031 30 3128 31 31 30 31 31Source: LCP Visualise 65 63. What is fiduciary management?Asset managementWith liability benchmarkDifferent things to different people!AdvisoryFiduciary Fund managerFund manager Tactical asset Strategic asset selection allocation rotationallocation Investment objectives cannot be delegated66 64. Market providers Investment consultantsAsset managersNo two offerings are the same67 65. Pros and cons of Fiduciary Management Faster decision-making Responsibility remains with Trustees Reduced governance timeConflicts of interest Greater professional involvement Limited track records may lead to superior returns Concentration of manager risk Access to best in classPotentially higher fees managers Complex and expensive to unwind Access to alternative assetStill requires monitoring classes for smaller Schemes Many of the perceived benefits of fiduciary management can be achieved through the traditional advisory model, such as:- Triggers for de-risking and hedging- Diversified growth funds- Adding more expertise to the trustee group- Impromptu ISC meetings68 66. DC Scheme InvestingDefault options / Life-stylingDiversified Lifestyle OptionRelative performance 67. Investment - what do DC memberswant? Focus on outcomes, not inputs Eventual pension benefit is the key factor Assets used to produce this are merely the means to an end Most members are risk averse Big losses are more significant than big gains Most members do not feel comfortable taking investment decisions Design of the default strategy is therefore crucial Most appropriate default strategy is a lifestyle option70 68. Default investment strategyTypical lifestyle option 100% Allocation of members assets 90% 80% 70% 60% 50% 40% 30% 20% 10%0%19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 0 Years to retirement Global equities Index-linked gilts Cash71 69. A better default strategy 100% 90% Allocation of members assets 80% 70% 60% 50% 40% 30% 20% 10%0%19 18 17 16 1514 13 12 11 10 9 8 7 6 5 4 3 2 1 0Years to retirement Global equities Diversified GrowthCorporate bonds Index-linked giltsFixed interest giltsCash 72 70. Lifestyle strategies risk vs return3 years to 30 September 201173 71. Investment ideasEmerging market multi asset fundsDiversified growth fundsSwitching triggers 72. The EMMAF conceptA multi-asset approach to emerging markets EquitiesEMMAF CurrenciesBonds 75 73. Diversified Growth FundsStrong risk adjusted returns over time 76 74. Trigger based switching strategiesAutomated strategic shifts to capture relative outperformance 90% 75% Relative performance differential 60% 45% 30% 15%0% First switch implementedRelative performance -15% on 4 Jan 2011 Triggers -30%20092010 2011 2012 2013 20142015YearLocks in outperformance of equities relative toscheme liabilities when affordable to do so Locks in outperformance of equities relative to scheme liabilities 77 75. Conclusions Pros and cons to fiduciary management arrangements May be suitable for some schemes Most of the benefits can be achieved under the traditional model Lifestyle and default options remain key for DC schemes Diversification of growth and bond elements Consider longer switching period to dampen volatility of returns EMMAFs can provide a risk conscious way to access emerging markets DGFs continue to provide a lower risk alternative to equities Automated trigger based switching strategies enable trustees to lock in outperformance relative to schemes liabilities 78 76. Scope This generic presentation should not be relied upon for detailed advice or taken as an authoritative statement of the law. If you would like any assistance or further information, please contact the partner who normally advises you. While this document does not represent our advice, nevertheless it should not be passed to any third party without our formal written agreement.LCP is part of the Alexander Forbes Group, a leading independent provider of financial and risk services. Lane Clark & Peacock LLP is a limited liability partnership registered in Englandand Wales with registered number OC301436. LCP is a registered trademark in the UK (Regd. TM No 2315442) and in the EU (Regd. TM No 002935583). All partners are members ofLane Clark & Peacock LLP. A list of members names is available for inspection at 30 Old Burlington Street, London, W1S 3NN, the firms principal place of business and registered office.The firm is regulated by the Institute and Faculty of Actuaries in respect of a range of investment business activities. Locations in London, Winchester, Belgium, Switzerland, theNetherlands, Ireland and the UAE.79 77. Blake Lapthorn Oxford Pensions ConferenceAndy Cheseldine 21 March 2012Auto-enrolment and DCadequacy.80 78. AgendaWhy auto-enrolment is necessary DC adequacyWhat is auto-enrolment?Implementation issues for youIdentifying different types of workerIdentifying your staging dateManaging costsCommunication and administrationCase study putting these issues into contextWhat should you be doing now? 81 79. Why auto-enrolment is necessary DC adequacy 80. The benefit strainMillions of people aged 60 and over receivingincome related benefits Source: ONS, Pension Trends, Chapter 5, 2011 81. Private pensions to the rescue?Millions of active members of occupationalpension schemes by sectorPercentage of 16 to 64 year oldscontributing to private pensions Source: ONS, Pension Trends, Chapter 7, 2011 82. The answer is auto-enrolment? How many will opt-out? What will 8% of Qualifying Earnings buy at retirement? How many 22 year olds will have a 46 year contribution history at State Retirement Age? What will the 2017 review bring? Compulsion? Increase in employer contributions? Increase in member contributions? Widening of Qualifying Earnings definition? 85 83. What do I get for my money Median earnings in the UK for full time workers are 24,024 pa (mean of 28,288) as at Q4 2011 (Source ONS) 8% of qualifying earnings (24,024-5,564) for this typical worker are 1,477 pa Ignoring pay growth (just to keep it simple) but adding in 3.5% real investment growth net of charges (broadly, SMPI assumptions) Gives a fund after 40 years of saving of 124,864 Which, today, would buy a 65 year old male a joint life, inflation linked annuity of. 307 gross per month (just over 15% of salary) But rich people live longer A 65 year old male retiring today, with a pot of 1,500,000 - the Lifetime Allowance (at least this morning), could buy a joint life, inflation linked annuity of. 2,831 gross per month (33,972 per year)Annuity rate sources: Money Advice Centre, Comparative Tables86 84. What is auto-enrolment? 85. In a nutshell From October 2012 onwards UK employers will be required: to automatically enrol eligible employees (eligible jobholders) into a pension scheme of sufficient quality (an automatic enrolment scheme) to automatically re-enrol them every three years if they opt out to contribute to that scheme for auto-enrolled employees But it is not one size fits all different quality requirements for DB, DC and Hybrid schemes clients with dissimilar workforce demographics will probably want fundamentally different solutions dont forget your existing scheme members; and contribution costs will, in many cases, be lower than administration costs in the early years 88 86. Implementation issues for you 87. Identifying different types of worker (2)Age 75OPT INEmployer contributionSPAOPT IN OPT INAUTO- ENROLNo employerEmployercontribution contributionEligible jobholder(Entitledworkers) Qualifying Earnings (QE) 22OPT INEmployer contribution 16 Earnings 5,564 8,10539,853 Qualifying EarningsUpper Earnings Trigger Limit Threshold 90 88. Staging date flexibility (1)Company ACompany B PAYE CODEPAYE CODE PAYE CODE91 89. Staging date flexibilityCompany A Company B SUBSIDIARY SUBSIDIARYSUBSIDIARY SUBSIDIARYPAYE CODE 1 PAYE CODE 2 PAYE CODE 1 PAYE CODE 292 90. Quality Requirements - DCDC and personal pensions the core requirementEmployer must contribute at least3% of QETotal contributions must be atleast 8% of QEThese rates will be phased inbetween 2012 and 2017 Employer EmployeeContribution Contribution 3%5%93 91. Staging and DC phasingStaging datedependent on no. ofemployeesOctober October October October October October201220132014201520162017120,000400employeesemployeesRequired DCER 1% ER 2% ER 3%contribution rateTotal Total Total(% of QE)2%5%8%October October October October October October October2012201320142015201620172018 94 92. Quality requirements - DCDC and personal pensions alternatives to allow certification7% of pensionable pay (inc minimum of 3% from employer) - subject to 100% ofearnings being pensionable8% of pensionable pay (inc minimum of 3% from employer) pensionable paycan exclude variable earnings subject to pensionable pay constituting at least85% of total pay bill9% of basic pay (inc minimum of 4% from employer) pensionable pay canexclude variable earningsNotes: Phasing applies in all three approaches Basic pay can include other elements of pay that do not vary (eg London Allowance) so potentially not just basic salary 95 93. Managing costsFrontSheet OutputsEmployer contributionsMinimum Contributions300,000based on QualifyingEarnings250,0009% Certification200,0008% Certification7% Certification150,000Existing scheme design100,000Alternative scheme design50,000Which certification route will be most suitable for0 you?2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 Note: the above is generic output from LCPs Auto Enrolment Modeller, the output from which is employer and scheme specific. 96 96 94. Earnings spikes - example 800 one off pay inc bonus5% pay riseto 472.50 450 pmpm regular wage97 95. Managing costs - options Trust-basedPhasing-in of DCscheme (shortcontributions service refunds)Salary sacrificeChanges to, or Waiting period forlevelling down,membershipof existing pension benefits 98 96. Communication and disclosureGeorge Bernard Shaw At least seven different versions ofPlaywright, critic, political communication required at staging date activist Early engagement 1856 1950 Consultation Communications reviewThe problem withcommunication is theillusion that it has happened.99 97. Administration processes and systemsreviewEligible jobholder?NoOpt in notice- Issued by employer Regular review- One month- Returned to employerIneligible due to Jobholder information- Age - From employer to scheme- SalaryEmployer required to pay contributions100 98. Administration processes and systemsreview Eligible jobholder?No Joining notice - Issued by employer Regular review - One month - Returned to employerIneligible due to Below Qualifying Jobholder informationEarnings Threshold- Age- From employer to a scheme- Salary Employer NOT required to pay contributions 101 99. Administration processes and systemsreview Eligible jobholder?No Opt in notice - Issued by employer Regular review - One monthBetween Qualifying - Returned to employerIneligible due to Earnings Threshold Jobholder informationand Eligibility- Age Trigger- From employer to scheme- Salary Employer required to pay contributions 102 100. Administration processes and systemsreview Eligible jobholder? Yes Enrolment informationAuto-enrol - Issued by employer - One month - Bespoke - Details of opt-out Jobholder information - From employer to scheme 103 101. Administration processes and systemsreviewEligible jobholder?Yes Opt out form - Requested by jobholder Auto-enrol - Issued by scheme - One month - Prescribed format Opt-out? - Returned to employerYes Employer duty - Notify scheme of opt out104 102. Administration processes and systemsreviewEligible jobholder?Yes Scheme actionsAuto-enrol - Membership unscrambled - Contributions returned to employer by refund date Opt-out? Employer actions - Contributions returned toYes jobholder105 103. Case studyPutting these issues into context 104. Case studyA pub/restaurant chainIssue Solution Multiple sites and employersOne staging date for all employers Multiple staging dateSimplified communicationsFrequent buying and selling ofAnalysed likely impact of a 2%premisesincrease in employer contributions on TUPE requirements sale (and purchase) pricesHigh staff turnover 30% Considered trust based for shortservice refund, but.High number of non-UK nationals NEST a likely provider for at leastsome staffKeep GPP for managers / headoffice staff107 105. Provider update 106. NEST Occupational DC scheme set up under trust Designed to help employers meet DC quality requirements (employer and employees can pay higher contributions) Maximum total contribution of 4,200 pa per member A 1.8% contribution charge plus 0.3% annual management charge Six funds available, with Target Date funds as default Active members already contributing Limited employer support 109 107. Provider selectionWhich provider? 110 108. What should you be doing now? 109. What should you be doing now?Understand what you need to do Understand whenyou need to do itCan you / shouldyou use existing How much will Plans?contributions cost?Who will / can dothe admin and record How much willkeeping? administration cost? Who will / can do the project management?112 110. Questions 111. Appendices 112. Staging Based on number of PAYE employees as at 1 April 2012 Employers due to auto-enrol in 2012 can bring forward their staging date to no earlier than 1 July 2012 Others can potentially bring forward their staging date to no earlier than 1 October 2012 Example staging dates:Number of employees Staging date 120,000 or more 1 October 2012 50,000 119,999 1 November 2012 800 1,249 1 October 2013500 799 1 November 2013