Presentation on theme: "The Automatic Enrolment Challenge www.ifa.org.uk Neil Mutton Director, Q & A People Matter 15.10 – 15.35."— Presentation transcript:
The Automatic Enrolment Challenge www.ifa.org.uk Neil Mutton Director, Q & A People Matter 15.10 – 15.35
The Automatic Enrolment Challenge Neil Mutton Director Q&A People Matter Ltd www.qnapm.com
What will be answered in this session - Current statistics - What is the pending demand ? - Planning for success - Pension Scheme options - Compliance and Record Keeping solutions - Employer types emerging
Who are Q&A People Matter Employee Benefits HR services Payroll Financial Advice & Education 40 staff, London, Dubai, Isle of Man
Accountants are key to your Clients success First port of call for most things Probably run payroll for them Understand their business Help them budget Take the pain away … They will need guidance !
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
Source: The Pension Regulator, Feb 2014 Staging profile (volumes of employers)
In Summary Automatic Enrolment legislation 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 not induce 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
Do you know your clients situation ? Staging Date Business Complexity Time to go to reach staging date Budget Pre – staging date activities For ongoing Pension contributions How will they communicate to their staff ? Who will do all the work ? How will you offer guidance ? Work with experts ? DIY ? Key decisions cannot be left until the last minute
Phasing the minimum contributions: Now - 2018 Defined contribution 1% employer contribution Defined contribution 1% employee contribution 3% employer contribution 5% employee contribution October 2018 2% employer contribution 3% employee contribution October 2017 October 2012 Staging period 2%5%8%+
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
Employer types emerging Sophisticated Employers Existing scheme / benefits Business complexity Staff Hierarchy in place 6m + to go before staging date Review existing situation Willing to consider ‘the best’ Undertake full review More advice Longer implementation “Take The Pain Away “ Employers No scheme in place No budget in place Left things late staging date looming – planning? Low business complexity ‘Vanilla’ solution Less advice Shorter implementation
Employee Benefits Strategy & Budget Same scheme for everyone ? Same % contribution for everyone ? Executives Senior Management Junior Management Workers SIPP ? Personal Pension ?
£5,772 £10,000.. The trigger for Auto-enrolment £41,865 Workforce assessment: “Qualifying Earnings basis” 2014/15 tax year £36,093
Assessing your workforce Eligible Jobholders Aged between 22 and State Pension Age Have ‘qualifying earnings’ in the Pay Reference Period EarningsAge (Inclusive) 16 - 21 yrs22 - SPASPA - 74 < £5,772Entitled Workers £5,772 - £10,000Non-Eligible Jobholder > £10,000 Non-Eligible Jobholder Eligible Jobholders Non-Eligible Jobholder
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.
Non-Eligible Jobholders Can choose to ‘opt-in’ Employers must then enrol them and make contributions EarningsAge (Inclusive) 16 - 21 yrs22 - SPASPA - 74 < £5,772Entitled Workers £5,772 - £10,000Non-Eligible Jobholder > £10,000 Non-Eligible Jobholder Eligible Jobholders Non-Eligible Jobholder 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 EarningsAge (Inclusive) 16 - 21 yrs22 - SPASPA - 74 < £5,772Entitled Workers £5,772 - £10,000Non-Eligible Jobholder > £10,000 Non-Eligible Jobholder Eligible Jobholders Non-Eligible Jobholder Assessing your workforce
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 !
Which pension scheme provider is best ? Does it matter ?
Recruitment conduct Probationary Periods Employment contracts Offer letters Policies / deduction of wages clauses … Data protection (sending data to 3 rd party pension providers) HR considerations
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
Getting it wrong …. & ….Compliance & Record Keeping
Fixed penalty £400 Fixed penalty £400 Persistent/Deliberate Offenders Escalating penalty Workers Penalty per day 1-4 £50 5-49 £500 50-249 £2,500 250-499 £5,000 500+ £10,000 Escalating penalty Workers Penalty per day 1-4 £50 5-49 £500 50-249 £2,500 250-499 £5,000 500+ £10,000 tPR: Powers & Penalties Prohibited recruitment conduct WorkersFixed penalty 1-4 £1,000 5-49 £1,500 50-249 £2,500 250+ £5,000 Prohibited recruitment conduct WorkersFixed 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) Third parties £200 per day escalating (up to £50,000)
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).
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
Options to manage Compliance and record keeping Manual administration Payroll software Accounting software HR software Bespoke Middleware Functionality ? Time ? Costs ?
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
Middleware: Links with any/all external systems
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
Q&A People Matter has a comprehensive range of global services that provides a “one stop shop” solution for a company’s personnel and management, legal and employee benefit needs. We pride ourselves on being forward thinking and creative. Together with our Alliance Partners we have a wealth of knowledge and experience in the HR and Employee Benefits arena. About Q&A People Matter Floor 34 Euston Tower 286 Euston Road London NW1 3DP Longdene House Hedgehog Lane Haslemere, Surrey GU27 2PH Mollfort House Kintyre Suite, Water Street, Ramsey, Isle of Man, IM8 1JP T: +44 (0) 845 4704818 F: +44 (0) 845 4705018 email@example.com www.qnapm.com Dubai World Centre Dubai UAE