Auto-enrolmentThe facts made simple

Are you in … control?

Agenda• About Carey Pensions UK

• Auto-enrolment – The facts, the opportunity, your options

• Auto-enrolment – Compliance solution

• Auto-enrolment – Qualifying Workplace Pension

• Summary

• Q&A’s

About Carey Pensions UK

About us• Carey Pensions UK is an independent provider of specialist pensions

administration

• Carey Pension Trustees UK Limited is an independent professional trustee of

pension schemes

• Part of a larger group that has been established for 40 years

• Share holders of the group are ten partners of one of the largest international

law firms

in the Channel Islands, Carey Olsen

• Carey Group administers over 25,000 members pensions across a range of

individual and company schemes

• Carey Group administers in excess of £1 billion pension assets and over

$18billion assets across the Group

• Carey Pensions UK is an award winning company for its customer service

provision

• Customers are at the heart of all that we do

• Committed to the delivery of quality products and services

Why is auto-enrolment happening?• People are living longer

• Retirement is under-provided for

• Minority of British adults contribute to a personal pension plan

• The government is compelled to take action

• Auto-enrolment is introduced to the UK to encourage all to save for their

retirement

A successful modelAuto-enrolment has been inspired by successful models in both Australia and New Zealand; Superannuation schemes and the Kiwisaver.

In the USA the take up rate of workplace pensions rose from 52% to 82% with the introduction of auto-enrolment in 2009.

What is auto-enrolment?• A new law by the government designed to help people save more for their retirement

• Companies are obliged to auto-enrol their employees into their scheme between October 2012 & February 2018 depending upon the number of employees in the company – “staging dates”

• There is a Qualifying Workplace Pension minimum criteria requirement that companies need to meet:

- Permit automatic enrolment- Automatically enrol employees within three months of joining the

company- Have a default investment option- Meet one of the minimum contribution tests- Meet one of the minimum contribution levels

It is primarily compliance and adhering to legislation

The basics and who qualifiesAn employee must be automatically enrolled if they meet the following criteria:• are not already active members in a Qualifying Workplace Pension• are at least 22 years old• are under the state pension age• earn more than £10,000 annually (this figure will be subject to change)• work or regularly work in the UK

After being enrolled an employee will have the option to opt out, but can choose to opt back in after 12 months.

Employers are legally required to re-enrol any employees who have chosen to opt out, and have not yet opted back in, every three years from the date of original enrolment.

Assessing Workers

Eligible Jobholders – Must be auto enrolled with employer contributionsAged between 22 and SPA, earn above £10,000

Non Eligible Jobholders - Have the right to opt in with employer contributionsAged between 16-21 or SPA-74, earn above £10,000Or Aged 16-74, earning above £5,772 but below £10,000

Entitled Workers – Have the right to join but the employer doesn’t need to contributeAged16-74, earn below £5,772

Minimum contribution tests for Money Purchase, Stakeholder and Group Personal Pension(GPP) schemes paid by companySTANDARD TEST ALTERNATIVE CONTRIBUTION TESTS

Minimum contribution of 8% of qualifying earningsWith at least 3% paid by company

TIER 1Contributions are at least 9% of pensionable pay*(4% minimum employer contribution) orTIER 2Contributions are at least 8% of pensionable pay* (3% minimum employer contribution) and, on average, pensionable pay is at least 85% of total pay, orTIER 3Contributions are at least 7% of total earnings (3% minimum employer contribution)

* The pensionable salary must be equal or more than basic pay.

Minimum contribution levels

DATE EMPLOYER CONTRIBUTION

EMPLOYEECONTRIBUTION

TOTAL CONTRIBUTION

October 2012 to September 2017

1% 1% 2%

October 2017 to September 2018

2% 3% 5%

October 2018 onwards 3%5%

(includes basic rate tax relief)

8%

Contributions in Australia are now 12.5% employer and 12.5% employee

Risks of non-complianceIt is important that employers understand the risks to them with whatever Qualifying Workplace Pension and/or auto-enrolment solution they choose. If the company is found non-compliant there is a risk of FINES. The fines are related to the number of staff in the company.

Fines will be levied where companies:• Fail to register with the regulator• Offer their employees incentives to

opt-out of joining the pension scheme• Fail to meet their monthly contributions

1-4 £50

5-49 £500

50-249 £2,500

250-499 £5,000

500 plus £10,000

NUMBER OF STAFFIN THE COMPANY

PRESCRIBED DAILY RATE FOR COMPANY

FINE

Staging dates

EMPLOYEES STAGING DATES

6000-9999 April 2013

4100-5999 May 2013

4000-4099 June 2013

3000-3999 July 2013

2000-2999 August 2013

1250-1999 September 2013

800-1249 October 2013

500-799 November 2013

350-499 January 2014

250-349 February 2014

160-249 April 2014

EMPLOYEES STAGING DATES

90-159 May 2014

62-89 July 2014

61 August 2014

60 October 2014

59 November 2014

58 January 2015

54-57 March 2015

50-53 April 2015

40-49 August 2015

30-39 October 2015

Fewer than 30 from June 2016

Auto-enrolment opportunity

In 2014 in the UK

38,000 employers (36,000 in the first 6 months of this year)

4.9 million employees

Alternative Options

NEST, NOW, People’s Pension Payroll Companies

Competitive pricing SAGEAimed at low to moderate earners IrisLimited investment choice CeridianDon’t all have an end to end solution ADPSimple application process MorepayNEST must accept all applications

Insurance Companies

Competitive pricingFamiliar brandEnd to end solution‘Cherry pick’ cases or strict acceptance criteriaBundled solution

Workplace PensionAuto-enrolment System

Regulator compliant

Bespoke portal Compliance

HR/Payroll interfaces

Workforce assessment Member communication

Record keeping

The Carey Auto-enrolment System – making it

simpleOverview

Auto-enrolmentOur specialist auto-enrolment portal team

will demonstrate the system functionality

• Pension schemes with multiple sections

• Assessment of scheme and sections

• Assessment of workers

• Enrol eligible jobholders

• Opt-in and out

• Electronic correspondence

• Reports/outputs

Regulator

Providers

Management Information

Carey Pensions UK auto-enrolment systemKey features

• Reduced employer administration costs

• Reduced employer administration resource

• Provision of own branded auto enrolment portal

• Fully functional fully compliant auto enrolment portal

• Automatic upgrades to the auto enrolment portal

• Full training on auto enrolment portal

• Full technical manual

• Access for employers

• Access for employees

• Technical support to employer

Implementation Process

• Training provided via webinar

• Fact find completion

• URL built by Carey Pensions UK

• Log ins sent to the employer and training provided via adviser or webinar

The Workplace PensionMaking it simple

Building bespoke pension solutions for corporate clients

The unbundled approach

The Carey Workplace Pension Trust

The Carey Group SIPP

Carey Pensions UK establishment responsibilities

Carey Pensions UK administration responsibilities

White labelling

The unbundled approach• ‘Best of breed’ independent partners• Industry specialists• Building bespoke solutions• Greater control• Ease of management• Pro-active monitoring and review• Working together for the future• Added value employee benefit

Building bespoke pension solutions for corporate clientsEach companyis different

Investment options can be tailored and pro actively managed

Implementation• Provide company ID and complete a 3 page application form

• CPUK create the Deed of Participation (DoP)

• Employer signs the DoP. The adviser returns this to CPUK along with adviser fee scheduleand Investment recommendation report (if outside the default)

• CPUK register the scheme with HMRC and TPR, coordinate with the investment house and HR/Payroll ready to collect 1st months contributions

Price for Employers with 50+ EmployeesAE System The Workplace Pension

£500 plus VAT one off set up fee £1000 plus VAT one off set up fee

£1.50 plus VAT per employee per month 0.75% AUM plus £1 per member per

month

TOTAL: £1500 plus VAT set up, £2.50 per employee per month, 0.75% AUM

How Can the Adviser Make Money?Example Adviser Charging: £3500 implementation fee = £2000 margin

£3.50 per employee per month = £12 per employee margin

Example: 1 Adviser Firm, 5 Consultants, 20 employers per consultant, 60 employees per

employer

20 employers x £2000 = £40000 x 5 consultants = £200000

20 employers x 60 employees x £12 = £14400 x 5 consultants = £72000

TOTAL: £272000

Price for Employers with less than 50 EmployeesAE System The Workplace Pension

£500 plus VAT one off set up fee £500 plus VAT one off set up fee

£1.50 plus VAT per employee per month 0.75% AUM plus £1 per member per

month

TOTAL: £1000 plus VAT set up, £2.50 per employee per month, 0.75% AUM

How Can the Adviser Make Money?Example Adviser Charging: £3000 implementation fee = £2000 margin

£3.50 per employee per month = £12 per employee margin

Example: 1 Adviser Firm, 5 Consultants, 20 employers per consultant, 25 employees per

employer

20 employers x £2000 = £40000 x 5 consultants = £200000

20 employers x 25 employees x £12 = £6000 x 5 consultants = £30000

TOTAL: £230000

Summary• Auto-enrolment is here – employers MUST take action!• Employers who delay are at risk of huge daily fines• From February 2014 there will be limited resource – providers will be selective, costs will rise,

fines will be charged• Compliance is time consuming and an on-going responsibility• With 8%+ contributions, employees deserve to feel engaged in their retirement plans• Employers should have flexibility and control• One size does not fit all• We’re here to help• Don’t delay!!