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…

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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:

info@enrolmystaff.co.uk• 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: info@enrolmystaff.co.ukw: www.enrolmystaff.co.uk