2. Issues covered
• What & When: summary of key duties
and staging dates
• Who: which staff are covered
and possible penalties
• How: using existing schemes
and managing costs
__________
Questions
3. Question for you ....
• When is your organisation’s staging date?
a) already passed?
b) Jan – June 2013?
c) July – Dec 2013?
d) 2014?
e) don’t know
5. Key employer duties
1. From staging date, enrol
“eligible jobholders”
automatically into an automatic
enrolment scheme
2. Pay minimum DC contributions or provide
minimum DB benefits
3. Re-enrol eligible jobholders who opt-out
approx every 3yrs
6. Other employer duties
• Provide eligible jobholders, non-eligible jobholders
and entitled workers with prescribed information
• Register with Pensions Regulator within 4 months of
“staging date”
• Keep records of auto-enrolments, opt-ins, opt-outs
and contributions
• legally, for at least 6 years (4 years for opt-outs)
• practically, for much longer
• Not to induce opt-outs
7. Worker categories and rights
Earnings Age 16-21 Age 22-SPA SPA- age 75
Non-eligible Eligible Non-eligible
£8,105+ in jobholder – jobholder – jobholder –
2012/13
may opt-in to an must be auto- may opt-in to an
(£9,440+ in automatic enrolled into an automatic
2013/14) enrolment automatic enrolment
scheme enrolment scheme scheme
£5,564 -
Non-eligible jobholder – may opt-in to an automatic
£8,105 enrolment scheme
(or £9,440)
Less than Entitled worker – can request to join a pension
scheme (but it does not have to be a qualifying scheme
£5,564
and not entitled to employer contributions)
8. Opting-out
• Eligible jobholders and non-eligible jobholders who
opt-in can opt-out within 1 month and receive a
refund of their contributions, but:
– not before they have been auto-enrolled
– opt-out paperwork must normally come from scheme
– employer must not incentivise opt-outs
– employers must re-enrol roughly every 3 years
• Can leave scheme after statutory opt-out window
• Beware workers with enhanced/fixed protection!
9. When?
• Phased introduction from 1 Oct 2012 – see
www.tpr.gov.uk/staging
• ‘Staging date’ determined by number of people in
employer’s PAYE payroll scheme on 1 April 2012
• What about:
– employers with more than one payroll scheme?
– multi-employer payroll schemes?
– small employers in large payroll scheme?
10. When?
Size of payroll scheme Staging date
on 1 April 2012
120,000 – 10,000 1 Oct 2012 – 1 Mar 2013
9,999 – 250 1 Apr 2013 – 1 Feb 2014
249 – 50 1 Apr 2014 – 1 Apr 2015
Less than 49 1 June 2015 – 1 Apr 2017
New employers 1 May 2017 onwards
11. Question for you ....
• How do you intend to deal with eligible
jobholders who have fixed or enhanced
protection?
a) enrol them
b) enrol them plus side conversation
c) not enrol them
13. Who is a “worker”?
In scope Out of scope
Employees x Self-employed
Those performing x One person companies
work personally and x Office holders
not as part of own x Volunteers
business
What about?
agency staff ?
casual/zero hours staff?
14. International workers
• AE only applies to workers who are “working or
ordinarily working in the UK”
• Question of fact – useful guidance on
secondments
15. Safeguards for workers
Eligible Non-eligible Entitled
jobholders jobholders workers
Prohibited
recruitment X X X
conduct
Not to be unfairly
dismissed or suffer
detriment on
grounds related to X X X
new employer
duties
Inducements X X X
Note – safeguards in force since 1 July 2012
16. Enforcement by the Pensions Regulator
• Compliance notice
Stage 1 • Unpaid contributions notice
• Fixed penalty notice
Stage 2 • £400
• Escalating penalty notice
Stage 3 • £50 - £10,000 per day
17. TUPE and auto-enrolment
• TUPE Pensions Protection Regulations –v- auto-
enrolment
• Duty to automatically enrol transferring
employees?
• Use of past opt-outs not allowed
18. Question for you ....
• Which department within your organisation do
you think is the most appropriate to lead the AE
initiative and monitor compliance?
a) Pensions
b) HR
c) Payroll
d) IT
e) Legal
20. Using an existing scheme
• An automatic enrolment scheme:
(i) must be a qualifying pension scheme, and
(ii) must not contain any provisions which:
– prevent the employer fulfilling its auto-enrolment
and re-enrolment duties, and
– require a member to make a choice or provide
information
• Review eligibility/admission requirements
• Default fund required
21. What is a qualifying pension
scheme?
• To be a qualifying pension scheme, a scheme
must:
– be an HMRC registered occupational or personal
pension scheme operating automatic enrolment; and
– meet minimum "quality standards"
22. Minimum DC contributions
• Minimum employer DC contributions to be phased-in over 5
years
Date Minimum employer Minimum total
contribution contribution
(% of qualifying earnings) (% of qualifying earnings)
Staging date – 1% 2%
Sept 2017
Oct 2017 - 2% 5%
Sept 2018
From Oct 2018 3% 8%
23. Qualifying pension scheme - DC
• Total contributions of 8% of “qualifying earnings” (min 3%
employer)
OR
• Total contributions of 9% of “pensionable earnings” (min 4%
employer) – where pensionable earnings are equal to or
greater than basic pay
OR
• Total contributions of 8% of “pensionable earnings” (min 3%
employer) - where at least 85% of total earnings of all eligible
jobholders is pensionable
OR
• Total contributions of 7% of “earnings” (min 3% employer) –
i.e. contributions are payable on all earnings
24. Qualifying pension scheme - DB
• Contracted-out
OR
• Contracted-in with:
– pension for life at state pension age
– annual accrual rate of 1/120th of average “qualifying
earnings” in last three tax years preceding the end of
pensionable service up to maximum of 40 years, and
– statutory revaluation and pension increases
• Additional requirements apply to hybrid schemes
and average salary schemes
25. Question for you ....
• Which pension arrangement is your organisation
going to use for auto enrolment?
a) trust based DC scheme
b) contract based DC scheme
c) DB scheme
d) external Master Trust
e) unsure
26. Saving costs - ‘postponement’
• Employers can operate a waiting period of up to
3 months by giving notice to workers
• May help with:
– casual/seasonal workers
– temporary workers
– quick leavers
– alignment of auto-enrolment with payroll
• Jobholders’ right to opt-in
27. Transitional period for DB schemes
• Employers with open DB/hybrid schemes can
delay auto-enrolment until 1 October 2017
• Only applies to certain eligible workers
• Must give notice and auto-enrol into appropriate
scheme at end of transitional period
• Worker can still opt-in to a qualifying scheme
28. Saving costs - salary sacrifice
• Employers can continue to use salary sacrifice but
need to consider:
– right to opt-out and HMRC guidance
– how to implement
– timing of implementation
• Salary sacrifice arrangement could bring earnings
under trigger
29. Question for you ....
• Of those who don’t already use salary sacrifice to
save NI on pension contributions, who would
now consider using this mechanism?
YES or NO
30. Conclusion – key action points
1 Identify your staging date and work back
2 Find an owner and form a working group
3 Identify all “workers”
4 Check terms of self employment / agency / secondment
5 Decide if you want to adapt an existing scheme - or use a new
one - or both
6 Consider using postponement mechanisms
7 Consider using salary sacrifice to save costs
8 Consider changes to wider benefits package
9 Take account of fixed / enhanced protection
10 Allow enough time
