This document provides information about auto-enrolment duties for employers. It discusses the different categories of workers (eligible jobholders, non-eligible jobholders, and entitled workers) and the duties employers have for each. It outlines that employers must automatically enroll eligible jobholders into a pension scheme and arrange membership for other workers. It also discusses options for employers to be compliant, such as the NEST pension scheme, and ways employers can manage costs like salary sacrifice. Finally, it emphasizes the importance of communication and preparing an action plan well in advance of an employer's staging date.

1. Auto-Enrolment
What You Need to Know
Tranmere Rovers Football Club
Wednesday 26th February – 8:00am - 10:00am

2. About Us
Justine Watkinson
Richard Landsberg
Paul McGerty
Rachel Hughes
Alison Hale

3. The Employer Duties
Alison Hale
Adviser at McLintocks
Wealth Management
Offering independent financial
advice, specialising in the
provision of pension and wealth
management services for
Individuals, Companies and
Trusts

4. The Employer Duties
A quick guide to automatic enrolment and the
employer duties

5. The Employer Duties
From October 2012 every UK employer must:
• register with The Pensions Regulator (TPR) &
provide details of workforce and pension scheme
• automatically enrol certain workers
• arrange membership of a pension scheme for
other workers

6. The Employer Duties
• The employer duties will be introduced in
stages from October 2012
• The staging date is the date that your
employer duties first apply
• It’s based on the number of people in your
largest Pay As You Earn (PAYE) scheme

7. The Employer Duties
You’ll have separate duties for three different types of
worker:
Eligible
jobholders
Non-eligible
jobholders
Entitled
workers

8. The Employer Duties
The different categories of worker are determined by
their age and how much they earn:
N.B. These figures are for the 2013/14 tax year

9. Employer Duties: Eligible Jobholders
You must:
• Provide certain information to the pension
scheme and eligible jobholder
• Automatically enrol them into an automatic
enrolment scheme
• Deduct any jobholder contributions from salary
and make contributions on their behalf
• Process any opt-out notices and refund
contributions paid

10. Employer Duties: Eligible Jobholders
You must also:
• Roughly every three years re-enrol those who have
previously opted out, stopped making contributions or
ceased membership more than 12 months before each
re-enrolment date
• Keep records of the automatic enrolment and opting
out processes and provide to TPR if requested
• Provide certain information to the eligible jobholder
within two months if they’re already in a qualifying
pension scheme

11. Employer duties: non-eligible
jobholders
You must:
• Provide certain information to the non-eligible
jobholder including their right to opt in to an
automatic enrolment scheme
• Arrange pension scheme membership
• Deduct any jobholder contributions from salary and
make contributions on their behalf
• Process any opt-out notices and refund contributions
paid

12. Employer duties: non-eligible
jobholders
You must:
• Re-assess worker type roughly every three
years and re-enrol those who have previously
opted out, stopped making contributions or
ceased membership more than 12 months
before each re-enrolment date
• Continue to assess the non-eligible jobholder
in case they change category depending on age
and earnings

13. Employer duties: non-eligible
jobholders
You must also:
• Keep records of the enrolment, opting in
and opting out processes and provide to
TPR if requested
• Provide certain information to the noneligible jobholder within two months if
they’re already in a qualifying pension
scheme

14. Employer duties – entitled
workers
You must:
• Provide certain information about their right to join a
pension scheme
• Arrange pension scheme membership (the scheme
doesn’t have to be an automatic enrolment scheme)
• Deduct contributions from their salary and pay these
into the scheme (you are not required to make
contributions although you can choose to do so)

15. Employer duties – entitled
workers
You must also:
• Continue to assess the entitled worker in case
they change category depending on age and
earnings
• Keep records of the joining process and provide
to TPR if requested
• If the entitled worked is already in a pension
scheme run by you, you don’t have to provide
them with any information.

16. Automatic Enrolment Schemes
These must meet 3 sets of criteria:
• Automatic enrolment criteria
• Qualifying criteria
• Quality requirements

17. Qualifying Earnings
The minimum contribution level to meet the contribution
quality requirement is based on qualifying earnings
Qualifying earnings are a band of earnings of
more than £5,668 and £41,450 or less2
2
These are the figures for 2013/14 and are expected to change each year.

18. Qualifying Earnings
The minimum contribution level can be phased in over six years:
Contribution rates required to meet the contribution quality
requirement as a percentage of qualifying earnings 3
Total must be at least
Employer must
contribute at least
October 2012 to
September 2017
2%
1%
October 2017 to
September 2018
5%
2%
October 2018 onwards
8%
3%
Date
3
Agreement must be in place for jobholder to make up at least any difference
between the total and the employer amount.

19. Certification
You can certify that your scheme
meets the quality requirement
The certificate can cover all
workers or groups of workers
in your scheme
The minimum contribution levels for certification can be
phased in over six years from October 2012

20. Pensions Regulator
The Pensions Regulator will:
Tell employers
when their staging
date is
Provide guidance and Have the power to impose penalties
information about the on employers, including a fixed
penalty notice of £400 & escalating
employer duties
penalties if you fail to comply

21. Inducement
4
The rules about inducement apply to all employers from 1 July 2012.

22. Options For Employers to
be Compliant
• NEST
• Employer sponsored Auto-Enrolment
Scheme
• Payroll

23. ‘NEST’
• Trust based Defined Contribution
scheme
• Maximum contribution £4,500
(2013/2014)
• Limited investment choice
• No transfers in or out
• No trustee discretion on death
• 0.3% amc plus 1.8% contribution
charge
Sources:
Personal Accounts Delivery Authority,
‘Frequently asked questions about
NEST’,
http://www.padeliveryauthority.org.u
k/nest-faqs.asp
DWP/PADA, ‘Pensions - Consultation
on draft scheme order and rules ‘ 28
April 2009.
Money Marketing, “IHT risk makes
personal accounts less attractive”, 3
November 2009.

24. Information
All of the information is based on our current understanding of the relevant
legislation and regulations (including drafts) and may be subject to change.
•
McLintocks Wealth Management Limited is an appointed representative
of Premier Pensions and Tax Consultancy Beech Court Business Center,
Moss Brow, Lymm, Cheshire WA13 9TL is authorised and regulated by the
Financial Services Authority. Under FCA Register number is 482631.
•
Our permitted business is advising on and arranging investments.
•
You can check this on the FCA’s Register by visiting the FCA’s website
http://www.fca.org.uk/firms/systems-reporting/register/search or by
contacting the FCA on 0800 111 6768.

25. Auto-Enrolment
The Administrative Burden
Richard Landsberg ACA
Manager
McLintocks Chartered Accountants &
Business Advisors

26. Auto-Enrolment
The Administrative Burden
•
•
•
•
Preparation
Initial & ongoing assessment
Processing payroll
E-Payslips

27. Preparation
• Preparation is key
• Start planning 18 months in advance
• Sage Pension Centre
- Create personalised action plan
- Deal with existing/new pension arrangements
- Cost forecasting
- Communication with employees
- Progress tracking

28. The Pension Centre

29. Auto-Enrolment Action Plan

30. Initial & Ongoing Assessment
• Sage Pensions Module
• Profile your workforce
- Status, age and earnings
- Eligible/non-eligible jobholder or entitled worker
- Manage postponements
- Probation Period
- Pay spikes

31. Initial & Ongoing Assessment
• Deal with opt-ins and opt-outs
- Stop deducting contributions
- Refund contributions already taken
• Triennial re-enrolment
• Responsibility to assess workforce every pay run
• Requirements to inform employees

32. Pensions Module

33. Processing Payroll
• Sending information to pension providers
- Different formats
- Automatically produce reports
- Direct link to the leading providers
• Processing payments to pension providers

34. Processing Payroll
• Detailed audit trail
- Record of all data and payment submissions
- Store receipts from pension providers
- Keep track of communications with employees
- Statutory requirement to keep records
• Time consuming process
- Sage Auto-Enrolment Calculator

35. Auto-Enrolment Calculator
Action
Select employees, run report & check data
Manage postponement
Apply pension schemes to those enrolled
Manage opt in and opt outs
Export data reports from pension software
Consolidate data for pension provider report
Add fields not covered by payroll software
Check report & upload to pension provider
Letters to employees
Make pension payments
Deal with employee queries
Data issues with pension provider
TOTAL
Minutes
5
12
8
8
9
20
20
16
48
4
40
40
230

36. E-Payslips
• Employees have access to online portal
• Benefits to employee
- Access to payslips & documents in one place
- 24/7 access from anywhere
- Notifications
- Emails
- Smartphone app

37. E-Payslips
• Benefits to employer
- Speed up delivery of payslips to employees
- Securely send information to employees
- Reduce costs

38. Summary
•
•
•
•
Prepare an action plan
Ongoing demands of auto-enrolment
The right software and experience is essential
Benefits of e-payslips

39. The Pension Problem
Paul McGerty
Director
McLintocks Chartered
Accountants & Business
Advisors

40. Overview
• The Pension Problem – a few statistics to give a flavour of
the issues and the costs
• A Recap on the Contributions
• Managing the Costs & Employees –some suggestions
• And finally don’t forget……Pensions are Good!

41. The Pension Problem
Just to give a flavour of the problem………
• The total liabilities of the UK Defined Benefit pension schemes now
tops £1 trillion, with the deficit hitting £200 billion;
• Contributions to personal pensions have fallen by more than £1
billion in the tax years from 2009/10; and
• 430,000 fewer investors saved into a personal pension in 2009/10
compared to 2008/9 onwards. Among those who were saving, the
average annual contribution fell from £945 to £886.

42. The Pension Problem
• Pre- AE, a report from the Department for Work and Pensions shows
that only 27% of private sector workers belonged to a work-based
pension scheme;
• The report showed that Stakeholder pensions were the most
common type of workplace pension but that only one-fifth of
employers providing them made a contribution towards them for
their employees; and
• The above decline in pension saving highlights the importance of the
auto-enrolment rules which arrived in 2012 - with the solution
placed firmly at the employer’s feet!!!

43. A Recap on the Contributions
• A minimum of 8% of an employee's qualifying earnings must be paid
into a pension, which is made up of:
- 3% employer contributions
- 5% employee contributions, of which 1% comes in the
form of tax relief; and
• It is important to note that employers may choose to pay more than
the minimum of 3%, in which case the compulsory 5% employee
contribution will be lower, providing that the minimum combined
pension contribution is 8%.

44. The Contributions
• The above could have a large cost implication for some employers,
particularly small ones;
• A survey conducted by Watson Wyatt shows that the current
average contribution for FTSE-100 companies is about 15%; and
• Most larger organisations will not have a problem - For smaller
organisations the headline rate is much closer to the 8% figure and
many put in less than that…if anything at all!!!!

45. Managing Costs and Employees
Some suggestions:
• One of the challenges that many employers face is how to balance
the long-term affordability of their pension contributions with the
needs of their staff;
• For some organisations, their current employer contribution levels
may be unsustainable once the reform takes effect and all staff have
to be auto-enrolled into a pension scheme;
• In the case of money purchase pension schemes employers have a
number of options…

46. Managing Costs and Employees
• Ring-fence existing higher contribution rates for all employees who
are currently members of the scheme and offer a lower employer
contribution rate for those employees who join the scheme through
auto-enrolment;
• This ensures that those employees who were members of the
organisation’s pension scheme prior to auto-enrolment are not
penalised, although this may cause disharmony among any
employees who receive the lower employer contribution level who
may feel that they are being disadvantaged.

47. Managing Costs and Employees
• The other option is to level down employer contribution levels for
existing pension scheme members to a lower rate, which will be
offered to all employees who join via auto-enrolment;
• Organisations wishing to go down this route will need to serve
notice of their intention to reduce contribution levels and enter a
consultation period with any affected staff and clearly legal advice is
required
• While reducing contribution rates may help to balance the books,
employees who are affected are likely to feel they are being unfairly
penalised by a reduced monies going into their pension pot.

48. Managing Costs and Employees
• It is also important to bear in mind that organisations that have to
offer reduced contributions or the minimum 3% employer
contribution rate may suffer a backlash from employees
• Employees will then need to contribute 5% (including 1% tax relief)
of their salary (or band earnings where appropriate) into their
pension

49. Managing Costs and Employees
• This is unlikely to go down well with many employees who will see a
reduction in their take-home pay.
• Employers will need to effectively manage staff’s perceptions around
pensions as many may blame their employers for this change,
regardless of the fact that it is actually a government requirement!!!

50. Managing Costs and Employees
• One further option that employers may wish to consider to help to
manage any cost increases is the introduction of salary sacrifice.
• Via this method, employees elect to reduce their salary and have
their sacrificed salary paid into their pension.
• As the employer will not have to pay National Insurance (NI) on the
sacrificed salary, this contribution can be enhanced by redirecting
the NI saving into the employee’s pension

51. Managing Costs and Employees
• Organisations with no current pension scheme in place may wish to
start giving a proportion of annual pay increases in the form of an
employer pension contribution over the next 1,2 or 3 years, for
example:
2% pay increase awarded to staff =
1% increase in employee’s salary
1% employer pension contribution

52. Managing Costs and Employees
• Whichever route employers choose to manage the likely cost of
pension reform, a good communication strategy is essential to
ensure that staff are aware of any changes and how this will affect
them;
• It may also be sensible to work with an adviser to provide staff with
access to financial advice and to support them with their individual
retirement planning; and
• This helps with the ‘de-personalising’ of the changes also, i.e.
reiterating the change is government enforced, not by the
employer!!

53. Don’t forget…Pensions are Good!!!!
There are numerous benefits in contributing to a pension scheme. For
pension schemes registered with HM Revenue & Customs (HMRC),
extensive tax relief is available:
• employees' contributions attract income tax relief;
• employer's contributions qualify for corporation tax relief (where the
employer is a corporation). If the employer is unincorporated (for
example partnerships) they may be subject to income tax relief
• scheme investments qualify for income tax and capital gains tax
relief; and
• This makes pensions a tax-efficient way of increasing employee
benefits and remuneration

54. Our Employment Law Speakers
Justine Watkinson is Head of
Employment Law at Hillyer
McKeown.
Rachel is a Solicitor in our
experienced Employment
Law Team.

55. Pensions Enrolment - The Legal
Part…
Provision of Prescribed Information
• Duty to provide specific information to the
workers
• Strict time scales – one month or six weeks
before staging date
• Good practice to provide information at least 6
months prior to the staging date

56. Pensions Enrolment - The Legal
Part…
Provision of Prescribed Information
• Write to the employee
• Confirm their legal position re pension, the date
of enrolment, how much they need to
contribute, the employer’s contribution, their
right to opt out
• Use a prescribed template

57. Pensions Enrolment - The Legal
Part…
Practical Tip - communicating the pension
changes
• Consider how the changes will be
communicated to employees
• At least 6 months prior to the staging date

58. Pensions Enrolment - The Legal
Part…
Contractual Change
• Amend contract of employment
• New term to include the pension provider
details and who the employee can obtain
information from

59. Pensions Enrolment - The Legal
Part…
Contractual Change
• Statement to confirm whether the employee’s
employment has contracted out of the state
pension
• No requirement to obtain “consent” for the
change as it is a statutory requirement for
eligible job holders

60. Employment Law Update
Transfer of Undertakings – 31st January 2014
• Pre-transfer redundancy consultation – now
counts as information and consultation under
reg 13(1) Tupe
• Micro businesses can inform and consult
directly

61. Employment Law Update
Transfer of Undertakings – 31st January 2014
• Variations to T&Cs allowed for an economic,
technical or organisational reason(“ETO”) or the
contract permits a variation
• Redundancies because of change in location no
longer automatically unfair

62. Employment Law Update
Transfer of Undertakings – 31st January 2014
• Service provision change – activities undertaken
by the new service provider must be
“fundamentally the same”

63. Employment Law Update
Transfer of Undertakings – 1st May 2014
• Employee Liability Information deadline –
increased from 14 days to 28 days

64. Employment Law Update
Early Conciliation – 6th April 2014
• Applies to all Tribunal claims from 1 April
• Claimant must contact ACAS

65. Employment Law Update
Early Conciliation – 6th April 2014
• Conciliation between the Claimant and
Respondent for one month
• Claimant cannot issue a claim until after the
one month window

66. Employment Law Update
Use of Social Media By Employees
• Lots of tribunal activity in this fast paced
area, and Employers/law struggling to keep
up!!
• Changes in the use of social media

67. Employment Law Update
Use of Social Media By Employees
• Employers uncertain of when disciplinary
action is justified
• Freedom of speech v gagging employees

68. Employment Law Update
How should employers deal with social
media?
• Set clear guidelines
• Update and amend your social media
policy, grievance and bullying policies
• Make clear which actions amount to
misconduct and gross misconduct

69. Thank You
Any Questions?
www.hillyermckeown.co.uk
www.mclintocks.co.uk