auto enrolment - are you ready?
DESCRIPTION
Auto Enrolment is a must for all small businesses and has been a real headaches for UK businesses large and small. At Davidson Asset Management we can help with Auto Enrolment and wanted to share this presentation with some handy points. If you'd like further help with Auto Enrolment then please get in touch with us over at http://www.employee-benefit-consultants.co.uk/TRANSCRIPT
AUTO ENROLMENT - ARE YOU READY? AUTO ENROLMENT - ARE YOU READY?
Employers awareness of Pensions Reform
Compulsion in all but name is coming…
Employers – who deals with auto enrolment issues?
Pensions Dept/Human
Resources
Owner
big
medium
small
? ‘Payroll’
I’m an Employer – what do I need to know?
• When do I have to have my scheme in place?• Who do I have to enrol into the scheme?• How much it is going to cost?• What are my options in terms of providing
an eligible scheme?• Is there anything I can do to fund
more efficiently?• What systems do I need for the administration?
Contributions - phasing in
Based on Qualifying Band Earnings
Steady State
What systems do I need for the administration?
2012/13 levels
Opting Out
Default ‘re-enrolment date’ is 3rd anniversary of Employer staging date
Income Replacement Rates
Source: Making Automatic Enrolment work – Oct 2010
* A New Pension Settlement for the 21st century, second report, Pensions Commission, Nov 2005, Govt target by 2053
60-66%*
state pension target income replacement rate
30% 45%Automatic Enrolment Additional Savings
Median income earner……saving for 40 years
state pension & auto enrolment
Enrolled Autos Ltd - Workforce Demographics
• Band A (30 employees)
– typical salary £50,000– 12% contribution – 8% Employer
• Band B (60 employees)
– typical salary £30,000– 10% contribution – 6% Employer
• Bands C & D (110 employees)
– typical salary £13,215– phased contributions/band earnings– transient / high opt our rate expected
Demographics, average age 30
• Band A - Average £500
• Band B - Average £250
• Bands C & D
–Yr 1 Average £13–Yr 2 Average £13–Yr 3 Average £33–Yr 4 Average £52
• Entire workforce
–Yr 1 Average £157–Yr 2 Average £157–Yr 3 Average £168–Yr 4 Average £179
} Average £333
What do monthly contributions look like?
Assuming no future salary increases, rounding to nearest whole number
Preparing for Automatic Enrolment
•Find out Staging Date
•Assess the workforce
•Determine earnings definitions
•Calculate costs
•Consider scheme type
•Communicate to workers
•Plan implementation
•Enrol eligible job holders
•Register with tPR & keep records
•Contribute to workers pensions
•Find out Staging Date
•Assess the workforce
•Review/determine earnings definitions
•Calculate Costs
•Review existing scheme
•Consider scheme type
•Communicate changes/terms to workers
•Plan implementation
•Enrol eligible job holders
•Register with tPR & keep records
•Contribute to workers pensions
Employer – no scheme Employer – with scheme
ALTERNATIVES TO NESTALTERNATIVES TO NESTThe People’s
PensionNEST NOW: Pensions
PRICE
One Single Charge
FUNDS
Default fund
Choice of funds
Fund switching
Able to mix investments
SERVICE
Employer support tools
Employee engagement assistance
Tailored employee communications
Online facilities
Salary sacrifice possible
Transfers in and out
Short service refunds Not known
Unlimited contributions
Gross and net contributions