employee benefits live 2014 automatic enrolment - common … · scheme for automatic enrolment. 4....

DM2847614 v2D These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Ian Digby Industry liaison team The Pensions Regulator 24th September 2014

Employee Benefits Live 2014 Automatic Enrolment - Common Myths


Introduction


•  As a society we are living longer, healthier lives.

•  There are currently four people of working age for every pensioner è by 2050 there will be just two.

•  Millions of people are under-saving for their retirement.

•  Only 1 in 3 private sector workers were in a pension scheme in 2012 è and the trend has been downwards for the last 40 years.

•  The reforms being introduced now will help millions of individuals to save more (or save for the first time) for their retirement.

7 million people are

under-saving

Why automatic enrolment is needed


What’s happened so far …

•  As at the end of July 2014

•  21,303 employers have completed their Declaration of Compliance (Registration),

•  covering over 17m workers, of which:

•  around 4m people were automatically enrolled; and

•  8.6m were already in a qualifying scheme;

•  423k workers had the Transitional Period applied;

•  and 4.4m were ‘none of the above’.


Proportion of all employees in a workplace pension

In 1997, 55% of employees were members of a workplace pension scheme, falling to 47% in 2012, prior to the introducAon of automaAc enrolment.

In April 2013, 85% of public sector and 36% of private sector employees were in a workplace pension.

ImplementaAon of automaAc enrolment commenced in 2012.


Investigations ‘99% of employers who have completed their declaration of compliance (registration) with us have done so without the need for us to use our powers’.

Source: The Pensions Regulator AutomaAc enrolment: commentary and analysis 2014

1,251 intelligence referrals for possible non-compliance


Staging profile (volumes of employers)

Planning ahead is key. Very large volumes staging from January 2016

DM 2750193 v3 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Automatic enrolment legislation gives employers a duty to: ü  automatically enrol all eligible jobholders ü  communicate to workers providing timely and appropriate information ü  allow non-eligible jobholders to Opt-in and entitled workers to join ü  manage Opt-outs within the Opt-out period and promptly refund

contributions ü  automatically re-enrol all eligible jobholders every three years ü  complete declaration of compliance (registration) with the Regulator ü  keep records, and ü  maintain payments of contributions.

The employee safeguards state that employers: û  must not induce workers to Opt-out or cease membership of a scheme û  must not indicate to a potential jobholder that their decision to Opt-out will

affect the outcome of the recruitment process

Overview of legal duties and safeguards

DM 2750193 v3 These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

What employers will need to do

•  Know when you need to be ready •  Provide a point of contact

•  Develop your initial plans

•  Find out who to enrol

•  Choose your software and check records

•  Choose a pension scheme

•  Automatically enrol your staff

•  Tell your staff •  Complete your declaration of compliance (registration)

•  Maintain records

•  Fulfil ongoing responsibilities


Lessons learnt – from employers who have staged •  Plan to have your pension and payroll ready 6 months ahead of staging. •  Employers need to know how to do each task, not just that it needs to be done.

•  Get help and advice if you need it, but remember that the responsibility for complying with the automatic enrolment legislation remains with the employer.

•  Keep in mind the importance and scale of employee data cleansing in advance of staging.

•  Employers should test their software in advance, including: –  assessment, –  payroll to pensions provider communications, and –  employee communications.

•  Many employers issued more than mandatory communications to their staff.

•  Declaration of compliance (registration) is a legal requirement or the employer may be fined – if you have used postponement at staging, you should not complete registration until the end of the postponement period(s).


Planning timeline - www.tpr.gov.uk/planner


Common myths


Myth

1.  Postponement delays the staging date and there is no need to do anything until then.

2.  Employers or advisors can work out the staging date using the staging date tables.

3.  Employers can use their existing pension scheme for automatic enrolment.

4.  Self employed contractors are not subject to automatic enrolment.

5.  You cannot help an employer choose a pension unless you are FCA accredited.

6.  The Pensions Regulator will never find out if the employer does not carry out its duties.

7.  It is only a £50 fine for small employers.

Reality

1.  Postponement does not change the staging date (and other duties still apply in this period).

2.  Employers are unlikely to know their PAYE size on 1 April12, so must use our staging date tool.

3.  It may not be possible, as the scheme may not be suitable and/or the provider may not allow it.

4.  It is possible for a self employed person to be a worker under AE in certain circumstances.

5.  You should not give an opinion, unless you have the expertise, but you can give the related facts.

6.  The Pensions Regulator gets daily PAYE data from HMRC and staff may also whistleblow.

7.  The regulator can issue a £400 fixed penalty for failing to comply with the employer duties and this may be followed by an escalating penalty.† We can also make employers pay employees’ back contributions.

Top myths

† For employers with 1 to 50 staff, this penalty ranges from £50/day to £2,500/day.


Myth

1.  If you send out a postponement notice after the 6 week deadline, it is just a ‘technical’ breach and doesn’t really matter.

2.  Sole employee/director companies will not have any automatic enrolment employer duties.

3.  Pensionable pay is used to determine which category a worker is (eg EJH).

4.  A person who leaves a pension scheme can be left until re-enrolment.

5.  You can’t Opt-out until a contribution has been taken.

Reality

1.  If a postponement notice is not issued within 6 weeks, it is nullified and the employer will have to retrospectively assess / autoenrol jobholders.

2.  A sole employee (who is a director of that company) is exempt, but the company may have non-employees who are considered workers.

3.  Qualifying Earnings must be used for the assessment, not pensionable earnings.

4.  Workers who have never been an EJH will need to be assessed every pay cycle.

5.  If the Opt-out window opens before the first payday, a contribution may never need to be taken.

Other common myths - I


Myth

6.  People contractually enrolled get an Opt-out window.

7.  To achieve active membership of a contract pension you can email the URL for the T&Cs.

8.  It’s ok if the employer does not send the enrolment info for new joiners to the pension provider until the Opt-out window closes.

9.  The Pay Reference Period (PRP) is the same as the pay frequency.

10.  The assessment should never be based on money paid before the staging date.

Reality

6.  A contractual enrolment has no “Opt-out window”, but can exit under scheme rules.

7.  The T&Cs have to be included or attached to the email or the contract will not be established.

8.  It must be sent by the end of the 6 week joining window – and the 1 month Opt-out period may end later than this.

9.  The PRP may or may not be the same as the pay frequency.

10.  Assessments using a tax month PRP are based on earnings paid from 6th of the month before.

Other common myths - II


Additional slides


Useful links

•  Staging date tool: www.tpr.gov.uk/employers/tools/staging-date.aspx

•  Planning tool: www.tpr.gov.uk/planner

•  The essential guide to automatic enrolment: www.tpr.gov.uk/employers/e-brochure/index.html

•  Our detailed guides for employers and pension professionals: www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx

•  Information about declaration of compliance (registration): www.tpr.gov.uk/declaration

•  Letter templates for employers: www.tpr.gov.uk/employers/letter-templates-for-employers.aspx


Useful links - webinars •  Automatic enrolment – dispelling the myths

www.tpr.gov.uk/press/webinar-automatic-enrolment-dispelling-the-myths.aspx •  Identifying your workforce and calculating minimum contribution levels

www.tpr.gov.uk/press/webinar-identifying-workforce-calculating-minimum-contribution.aspx

•  Implementing automatic enrolment systems and pension schemes www.tpr.gov.uk/press/webinar-implementing-automatic-enrolment-systems-schemes.aspx

•  Automatic enrolment – are you ready? www.tpr.gov.uk/press/webinar-automatic-enrolment-are-you-ready.aspx •  Automatic enrolment registration www.tpr.gov.uk/press/webinar-automatic-enrolment-registration.aspx •  Automatic enrolment ‘question time’ www.tpr.gov.uk/press/webinar-automatic-enrolment-question-time.aspx

employee benefits live 2014 automatic enrolment - common … · scheme for automatic enrolment. 4....

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