Auto enrolment – an overview for local councils Terry Edwards Senior Pensions Adviser

2 This overview…. Gives a brief outline of what employers should do to prepare for auto enrolment (but does not cover what to do if you don’t offer LGPS to all / some workers) Points employers to sources of more detailed information and guidance

3 Preparing for auto enrolment – the steps you need to take Duties from July 2012 Find out your staging date Assess your workforce Communicate with your workforce Enrolment (and opting out / re-enrolment) Register with the pensions regulator and keep records

4 Preparing for auto enrolment – Duties from July 2012 Payment of contributions by 22 nd now statutory (if electronic – otherwise still 19 th ) Prohibited recruitment conduct – no hint of success being conditional on opting out of pension scheme Inducement to opt out of any qualifying scheme – no action, threat or reward linked to scheme membership Unfair treatment / dismissal of workers – no action or threat against workers who seek to enforce their auto enrolment rights

5 Preparing for auto enrolment – Find out your staging date – existing employers Date defined by the number of persons in the largest PAYE scheme (number of persons, including pensioners and councillors) on 1 st April 2012 Large employers (>120,000) date is 1 st October 2012 then phased by size between November 2012 and April

6 Preparing for auto enrolment – Find out your staging date – issues to note Employers with more than one PAYE scheme use the largest (number of persons) to determine the staging date Employers who share a PAYE scheme have the same date except small employers (<50 workers) who may put back their date to between 1 st August 2015 and 1 st April 2017 Apart from small employers who put their staging date back, employers may bring the staging date forward (e.g. to avoid end of year) but must tell TPR + agree with Administering Authority

7 Preparing for auto enrolment – Assess your workforce A ‘worker’ is a person who ordinarily works in UK under: A contract of employment (i.e. an employee), or Any other contract by which the individual undertakes to do work or perform services personally for another party to the contract (i.e. they cannot send a substitute or sub-contract the work) and the individual is not undertaking the work as part of their own business – excludes office holders e.g. councillors)

8 Preparing for auto enrolment – Assess your workforce – 3 categories of worker Age Earnings** <SPA*SPA*-<75 Under lower earnings threshold (£5,564) Entitled worker Between £5,564 and £8,105 Non-eligible jobholder Over earnings trigger for automatic enrolment (£8,105) Non-eligible jobholder Eligible jobholderNon-eligible jobholder *State Pension Age. **Earnings: Not FTE; not pensionable pay; per pay reference period. Separate contracts treated separately. Continually monitor age / earnings to see when first crosses border into new coloured box.

9 Preparing for auto enrolment – Assess your workforce – issues to note Earnings = salary, wages, commission, bonus, overtime, SSP, SMP, ordinary + additional paternity pay, statutory adoption pay (not salary sacrifice or P11D benefits)

10 Preparing for auto enrolment – Communicate with your workforce On your staging date, existing workers will fall into one of 3 groups: - those already in the LGPS - those not already in the LGPS - opted out - those not already in the LGPS - < 3 month contract

11 Preparing for auto enrolment – Communicate with your workforce On your staging date, existing workers already in LGPS: Stay in LGPS Eligible and non-eligible jobholders = notification within 2 months that they are in a qualifying scheme and where to get further info Entitled worker = no info requirements (but send same letter anyway)

12 Preparing for auto enrolment – Enrolment On your staging date for existing optants out (contract 3 months+) Non eligible jobholders and entitled workers – do not auto-enrol but notify within 1 month of staging date (and if changes category) of right to opt in and where to get more info (but automatically enrol from date first becomes eligible jobholder)

13 Preparing for auto enrolment – Enrolment On your staging date for existing optants out (contract 3 months+) Eligible jobholders – auto-enrol into LGPS + notify within 1 month that they have been auto-enrolled, enrolment date, opt out info, etc plus notify Pensions Section within 1 month Or Defer auto-enrolment to 1 st October 2017 (if you apply Transitional Delay they must be informed within 1 month of staging date and given the right to opt in and told where to get more info)

14 Preparing for auto enrolment – Enrolment Transitional delay: Reasons for / against Auto-enrol on 1 st October 2017 (if still eligible jobholder – if not, auto-enrol when first again becomes an eligible jobholder)

15 Preparing for auto enrolment – Enrolment On your staging date for existing < 3 month contracts who are not in LGPS: Non eligible jobholders and entitled workers – do not auto-enrol but send 3 month postponement notice within 1 month of staging date, but can opt in Eligible jobholders - defer auto-enrolment to 1 st October 2017 (makes sense if applying Transitional Delay to existing eligible jobholder optants out) or send 3 month postponement notice within 1 month of staging date, but can opt in

16 Preparing for auto enrolment – Enrolment From your staging date (new starters) New starters with 3 month+ contract – contractually enrol and send letter within 2 months saying they have been enrolled into a qualifying scheme and where to get further info New starters with < 3 month contract – issue postponement letter within 1 month but can opt in (casuals – put on back of time sheet)

17 Preparing for auto enrolment – Enrolment From your staging date Optants out – continually review each pay reference period (i.e. for change in earnings, attaining age 22) Auto-enrol if becomes eligible jobholder for first time and send letter within 1 month that they have been auto-enrolled, enrolment date, opt out info, etc plus notify Pensions Section within 1 month If becomes non-eligible jobholder or entitled worker for first time send letter within 1 month saying can join LGPS and where to obtain further info

18 Preparing for auto enrolment – Opting out (simplified procedure) Only after contractually or automatically enrolled Only use prescribed form (from Pensions Section) Can opt out of some or all jobs Form to be sent to employer Employer must notify Pensions Section Treated as non-member if opts out within 3 months Refund to be paid by employer within 1 month of receipt of opt out form (unless payroll missed, then by end of next pay period) Employer to reduce next pay over to Fund by ees and ers contributions

19 Preparing for auto enrolment – Re -enrolment Re-enrol eligible jobholders within 3 months before / after anniversary of staging date (provided did not opt out within previous 12 months) Thereafter within 3 months before / after 3 rd anniversary of previous re-enrolment date Note: If ceases to be eligible jobholder (becomes non-eligible jobholder or entitled worker), and again becomes eligible jobholder before re-enrolment date without a break, don’t have to enrol then, but do have to on re-enrolment date (provided still eligible jobholder on re- enrolment date) If ceases to be eligible jobholder (becomes non-eligible jobholder or entitled worker), and again becomes eligible jobholder after re-enrolment date without a break, don’t have to enrol when again becomes eligible jobholder So, eligible jobholder only enrolled on starting, or on first becoming eligible jobholder after opting out after staging date, or on re-enrolment date if eligible jobholder on that date

20 Preparing for auto enrolment – Register and keep records Employers must register with the regulator within 4 months of staging date Re registration every three years if re-enrolling eligible jobholders Comprehensive information required to be kept by employer and Pensions Section to demonstrate compliance Records must be kept for 6 years under regulations (4 years for original opt out forms)

21 Preparing for auto enrolment – Compliance Regulator has powers to impose penalties for - failure to comply with duties - non-compliance with contravention notices

22 Further information- The Pensions Regulator 1 Employer duties and defining the Workforce - An introduction to the new employer duties 2 Getting ready - First steps to prepare for the new employer duties 3 Assessing the workforce - How to identify the different categories of workers 3a Postponement 3b Transitional period for defined benefit (DB) and hybrid schemes 3c Having completed the assessment 4 Pension schemes - Pension schemes under the new employer duties 5 Automatic enrolment - An explanation of the automatic enrolment process 6 Opting in and joining and contractual enrolment - How to process pension scheme membership outside of the automatic enrolment process 7 Opting out - How to process ‘opt outs’ from workers who want to leave a pension scheme 8 Safeguarding individuals - The new safeguards for workers 9 Keeping records - Records that must be kept by law under the new employer Detailed guidance is available on-line at the Pension Regulator’s website Several documents for employers have been prepared and are updated from time to time. Here is a list of the currently available guidance notes:

23 Further information- other resources Guide to auto enrolment – LGA produced - LGPS based – see Training course – auto enrolment and other employer duties run by LGA - LGPS based

24 Thanks for staying awake Any questions?

25 Disclaimer The information contained in these slides has been prepared by the LGPC Secretariat, a part of the Local Government Association (LGA). It represents the views of the Secretariat, based on our current understanding of the law. It should not be treated as a complete and authoritative statement of the law. Readers may wish, or will need, to take their own legal advice on the interpretation of any particular piece of legislation. No responsibility whatsoever will be assumed by the LGPC Secretariat or the LGA for any direct or consequential loss, financial or otherwise, damage or inconvenience, or any other obligation or liability incurred by readers relying on information contained in these slides.