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Julie Roche, Cert PFS, Cert CII(MP)Julie Roche, Cert PFS, Cert CII(MP)

Automatic EnrolmentAutomatic Enrolmentthe employerthe employer

duties and NESTduties and NEST

The information in this presentation does not constitute The information in this presentation does not constitute financial advice. Anson IFA Ltd is authorised and regulated financial advice. Anson IFA Ltd is authorised and regulated

by the Financial Services Authority. The seminar is based on by the Financial Services Authority. The seminar is based on our understanding of the rules and legislation, some of our understanding of the rules and legislation, some of

which is still in draft format and maybe subject to change. which is still in draft format and maybe subject to change. Whilst efforts have been made to ensure the accuracy, Whilst efforts have been made to ensure the accuracy,

Anson IFA Ltd do not accept any responsibility or liability Anson IFA Ltd do not accept any responsibility or liability whatsoever in relation to the contents of thewhatsoever in relation to the contents of the

presentation.presentation.

Why?Why?

Many are not saving at all and many are just not saving enough!Many are not saving at all and many are just not saving enough!

Because ........Because ........

The government estimates 7 million people are not saving enough for The government estimates 7 million people are not saving enough for retirement.retirement.

86% of all UK employers have no pension provision.86% of all UK employers have no pension provision. 31% of employees do not take up the offer of an employer 31% of employees do not take up the offer of an employer

contributions.contributions. 13.8 million people now have no workplace pension provision.13.8 million people now have no workplace pension provision. This is 53% of the UK workforceThis is 53% of the UK workforce

Source: DWP & NAPFSource: DWP & NAPF

What are we going to review?

Auto-enrolment: The Basics

Who do you need to auto-enrol?

When do you need to auto-enrol?

What do employers and employees need to pay?

Which schemes can you use?

Action points for employers

How we can help

Auto Enrolment: The basics

Comes into force from 1st October 2012

Employers will have to enrol eligible workers into a qualifying workplace pension arrangement

Employers will need to pay contributions for eligible jobholders in the scheme

Who do you enrol?

Employees that are:

Over the age of 22 and under state pension age

Works or ordinarily works in the UK

Includes part-time/contract workers

Have “qualifying earnings” (QE) - Threshold £7,475

The contract does not have to be in writing

This may include agency workers

All employees have the right to opt out of auto enrolment

If they choose to opt out, after 3 years the auto enrolmentprocess must be repeated

There are a few exemptions, employer duties do not apply to these people:

If the individual is the only person in a company

Serving member of the naval, military or air forces of theCrown

Eligible jobholders

Non-eligible jobholders

Entitled workers

Eligible JobholdersThey are called this because they are eligible for auto enrolment.Aged between 22 and state pension age.Qualifying earnings above the earnings trigger. (Currently £7475)

Non Eligible JobholdersAged at least 16 and under 75.Have qualifying earnings payable by the employer above the lower earnings level for qualifying earnings. (Currently £5035)

Entitled workersThey are called this because they are entitled to join the pension scheme butdon’t qualify.Aged between 16 and 75Earn below the lower earnings level for qualifying earnings. (£5035)

Those aged under 22 and over 16 do not need to be auto enrolled but they must be provided with information giving them the right to opt in if they wish.

When do you need to auto-enrol?

Each employer will be given a date from which the changes will have to be in place. This is known as the staging date.

This will be phased in over 4 years, starting with the largest employers.

The first staging dates will be October 2012 and will continue until 2016.

The starting date for most employers will be based on the number of employees on payroll at 1 April 2012.

For employers with fewer than 50 employees, the date will be determined by the employers PAYE reference number.

For more details on staging dates you can check on:www.dwp.gov.uk/docs/staging-dates-by-employer.pdf

What do employers and employees need to pay?

Employers are required to base their minimum contributions for auto enrolment on qualifying earnings.

These are earnings between £5,035 and £33,540 and include Basic SalaryCommissionBonusesOvertime

The lower limit each year will increase in line with the threshold at which National Insurance starts to be paid.

The upper limit will increase each year in line with average earnings.

Minimum Contributions?

The rules require minimum contributions to pension schemes including a payment from the employer

The minimum contribution from an employer is 3%

The employee contribution will receive tax reliefE.g. Employee pays 4% and tax relief of 1% will be added. 5% in total

The total can be made up entirely by the employer or paid by a combination of employee and employer

Minimum Minimum ContributiContributionon 8%8%

Employee Employee PaysPays4%4%

Tax ReliefTax Relief

1%1%

You PayYou Pay

3%3%

What schemes can you use?

Occupational trust based schemes

Group Stakeholders Scheme.

Group Personal Pension Schemes

Group SIPP

NEST – National Employment Savings Trust

NEST

NEST National Employment Savings Trust

Established by Government

Employers can use NEST National Employment Savings Trust

It is aimed at those who don’t have a good quality pension scheme

Option to use it as an entry level scheme for a particular group of workers

Action Points for Employers

Check your staging date.

Assess the workforce to identify employees that need to be auto Enrolled

Conduct a review of any existing pension arrangements in place

Conduct a review of a new scheme

Consider additional costs of pension contributions

Consider administration costs & record-keeping requirements

Consider changes to the payroll system

Consider setting up a scheme in advance of your staging date

You must not:

Encourage employees to opt out.Use recruitment practices that will benefit job applicants who indicate they are prepared to opt out.Treat an employee unfairly or put them at a disadvantage because of auto enrolment.

Employers that fail to comply will be issued a fixed penalty of £400.Followed by penalties from £50 - £10000depending on the number of employees and scales of offence.

Case Study

Sharon is 35 and earns£37,000 pa working as aRecruitment Consultant

Sharon’s employer will be required to automatically enrol her into a workplace pension.Her employer will make a contribution of 3% of her earnings between £5035 and £33540.An annual contribution of £855 pa.Sharon will also make a contribution of 4% of band earnings.An annual contribution £1140 pa.She will receive tax relief (1%) £285 pa.Total contribution into her workplace pension will be £2280 pa.

Case StudyTom is aged 20 and is trainingto become an Electrician, heearns £15,000 pa

Tom’s employer does not have to automatically enrol him.He can request to be enrolled.If he does his employer will have to make contributions to Tom’s pension.

Case Study

Bob, an Accountant is 67, he earns £45,000 pa and is already a member of his company’s pension scheme

Bob’s employer does not have to automatically enrol him.He is a non-eligible job holder.He can request to be enrolled.If he does his employer will have to make contributions to Bob’spension.

Case Study

Jan age 29 works in a privateday nursery part time, sheearns £75 per week

Jan’s total yearly income is £3900 pa.This is below the threshold.Her employer will not have to automatically enrol her.She is an entitled worker.Jan can request her employer enrols her.If this was the case her employer would NOT have to pay any contribution, although they can if they wanted to.

How can we help?

Get to grips with what you need to do to comply

We can prepare a Pension Review Report

We will work with your other professional advisers

We will provide support to help implement changes to your current scheme

Enrol your employees

Help with communicating changes to all employees

We provide support to your employees in helping with the choices available

Thank you

Further information is available on request

Contact: Julie Roche Cert PFS, Cert CII(MP)

julie@ansonifa.co.uk

Suite 26, Century BuildingTower StreetBrunswick Business ParkLiverpoolL3 4BJ0151 707 8848