Hampshire Association of Local Councils Workplace Pensions 21 st - - PowerPoint PPT Presentation

Welcome

Hampshire Association

• f Local Councils’

Workplace Pensions 21st September 2015

J

• hn Le Poidevin

M ember of the Pensions M anagement Institute’s Auto Enrolment Accredited CPD Programme Nationwide 646 holders of this examination

Automatic Enrolment

The Team

John Le Poidevin

• 40 years in Financial Services
• Director, IFA business 1990 to 2011
• Compliance Officer 1995 to 2011
• Pensions Specialist 1987 to date
• Auto Enrolment Consultant
• PM I Certificates in Pensions Auto Enrolment
• & Trustee Pensions Knowledge
• tPR’s Trustee T
• olkit Certificate
• PM I Automatic Enrolment Accredited

CPD Programme.

Ian Batterbee

• 24 years in financial services
• Independent Financial Adviser
• Contributor & development role -

Annuity Direct

• Pensions and consultancy roles in Norwich

Union, Standard Life and Canada Life

• Dip Pfs Diploma in Financial Planning

Liam M cCann

• 25 years in Accounting Services
• 15 years in the Civil Service
• Payroll processes and procedures
• M ember of the Chartered Institute of

M anagement Accountants

• Business planning, budgeting and

forecasting support for SM Es’

Ian M iles

• 42 years in Procurement
• Supply chain, procurement &

logistics Consultant

• Practiced in large-scale change

management

• Supplier/client/stakeholder relations skills
• CIPS
• CIOB
• ICM

value additional

Staff

leavers

• ngoing

employees changes

normal

pay

created

Schemes

choice

people

Support

Pay-out certain use government

tax

paid

receives

Funding

ways

Staff provision

Pension

Plans

Staging Date

enrol

fines The Pensions Regulator tPR

auto-enrolment

Law understanding

submissions

assessment Non-eligible Opt-out Opt-in

people

categories QWPS

Qualifying Workplace Pension Scheme

cost Planning

Communications

postpone flexibility future

secure money

relax

£

safe

features

• Pensions Acts 2008 & 2011
• Pension Reform
• Workplace Pensions
• Automatic Enrolment

Does it affect my Council?

Auto enrolment

A new law means that every employer must automatically enrol workers into a workplace pension scheme if they:

• are aged between 22 and State Pension age
• earn more than £10,000 a year
• work in the UK

This is called ‘automatic enrolment’.

It will not affect you if… … .

• Y
• ur Council employs fewer than one, (that is none)
• All Local council workers are Self Employed

contractors,

• But…

… … … … … .

• In accordance with HM RC rules Clerks and RFOs to

local councils cannot be engaged as Self Employed contractors

The Pension Problem

• Ageing population
• Prolonged period of low interest rates
• Small employers less likely to provide pensions
• Personal savings too small
• Stakeholder Pension strategy failed

The Pension Solution

• Have an Earnings Related State Pension?
• Privatise secondary pension provision
• Tell Employers how much to pay
• Tell Employees how much to pay
• Provide a purpose built scheme

Then… … … … … … .

The Pension Solution

M ake it unnecessarily complicated by giving choices

• Allowing opt-outs after the event
• Allowing Postponement, but employees can

say “No, I want to join now”

• Excluding many current schemes
• Assess eligibility on earnings of £10,000pa
• Then calculate contributions on £5,824+*

* Capped at £42,385

What does this mean for local councils?

• M ay need a qualifying pension scheme, or have a

process in place for installing one in a timely manner

• M ust issue statutory communications within

prescribed timescales

• M ust monitor workers on an ongoing basis for

changes in age and earnings

• M ust submit a Declaration of Compliance to the

Pensions Regulator and keep appropriate records

What else must we do?

M onthly gross earnings (2015/ 16) Age 16 – 21 22 – State Pension Age State Pension Age - 74 £486 and below ENTITLED WORKER (If they ask you to, you must provide a pension scheme for them, but you don’t have to pay contributions) Over £486 up to £833 NON ELIGIBLE J OB HOLDER (If they ask to be put into a pension scheme, you must put them in your qualifying pension scheme and pay regular contributions) Over £833 NON ELIGIBLE J OB HOLDER (If they ask to be put into a pension scheme, you must put them in your qualifying pension scheme and pay regular contributions) ELIGIBLE J OBHOLDER (You must put these members of staff in your automatic enrolment pension scheme and pay regular contributions. You don’t need to ask their permission) NON ELIGIBLE J OB HOLDER (If they ask to be put into a pension scheme, you must put them in your qualifying pension scheme and pay regular contributions)

Date Employer minimum contribution Total minimum contribution Before 30/ 09/ 2017

1% 2% (including 1% staff contribution)

01/ 10/ 2017 — 30/ 09/ 2018

2% 5% (including 3% staff contribution)

01/ 10/ 2018

• nwards

3% 8% (including 5% staff contribution)

Pay reference thresholds

2015 - 2016 Annual 1 week 1 month Lower level of qualifying earnings £5,824 £112 £486 Upper level of qualifying earnings £42,385 £815 £3,532

How are we doing?

• 1. Why did we need pension reform
• 2. When commentators refer to the capacity

crunch, what do they mean

• 3. We have a pension scheme so we don’t need

to do anything. True or False?

• 4. What happens to employees when they

reach State Pension Age?

• 5. I’ve heard there is an Opt Out so that is what

we will do. Is that OK?

The Fines

Extract from the Pensions Regulator Website

The table below illustrates the escalating penalties that might be applied to employers for breaches of their automatic enrolment duties.

Number of employees Prescribed daily rate

1 - 4

£50

5 - 49

£500

50 - 249 £2,500 250 - 499 £5,000 500 + £10,000

Legislation breaches / non compliance will also invoke

£400 Fixed Penalty

where non compliance continues for each breach

Don’t Assume that… … … …

Five common misconceptions that Local Councils must avoid;

1. the chosen pension provider will do the work; 2. the payroll provider will tell you all you need to do; 3. the work will stop once staging has started; 4. all staff must have a pension 5. most people will opt-out anyway.

Source: Employers that have completed Staging as reported in Payroll World, 13th September 2013

Don’t Delay

Letter from DWP advising of Staging Date Do you have a Pension Scheme? Are all eligible employees members? Is it a QWPS? Yes No Yes No Can it be amended to QWPS? Yes No Pension Scheme Required? Yes No Do I need help? Have you communicated with your employees? Have you assessed your records for compliance? Employer to install a Qualifying Workplace Pension Scheme Fully Compliant and inform all employees Automatically Enrol all employees on your Staging Date Consider Postponement and decide on Deferment Date Tier 1 Contribute

• n basic salary

Tier 2 Contribute

• n basic salary -

>85% of collective gross Tier 3 Gross pay 3 Options available to Employers Opt-in Opt-out Non- Eligible Entitled Eligible job holder to contact Pension Administrator Employer Contribution Employer Optional Contribution Employee assessment required – essential for primary or enhanced protection Employee decision

Payroll

No Change No Change Change Run Payroll Evaluate Change Evaluate File Payroll Send to HM RC Send to Pension Provider Evaluate Re-Run Payroll Have you Registered the scheme with the TPR? Yes Pension Provider to send file of Opt-Out Evaluate Staff

The Pensions Regulator

• Everything you need to know on-line
• They know your Staging Date
• They have RTI returns
• They know what to expect, after all,
• They have set the framework

What should you expect?

• Every pension provider requires data in a

different format

• Every Payroll system provides it in a different

format

• Expect a cost for payroll to link to pension
• Consider combining payroll and AE function

Watch out for… … … … … ... attempts to confuse you

When;

• Eligible means your employees are enrolled into

your pension scheme without doing anything, the Automatic bit.

• They may Opt Out, but only after you have done

the work to put them in.

• Non Eligible? Ah! Well…

… … … … … … … .

Watch out for… … .potential misinterpretation

• Non Eligible means you are entitled to and eligible

for a pension contribution from the council, but only if you ask to Opt In, in writing

• Entitled means you are not eligible and, well, not

really entitled to very much.

• Entitled Workers may join the pension scheme, the

council must deduct contributions from pay, it is not required to make an employer payment.

How are we doing?

• 1. How many employers have auto enrolled

since 2012?

• 2. How many will auto enrol Jan to M ar 2016?
• 3. How many from now to Oct 2018?
• 4. Will it be more cost effective to call LGPS for

auto enrolment?

• 5. “ I’m already drawing a pension, please don’t

put me in another scheme”

Y

• u must…

.

• Assess your workforce
• Issue appropriate communications
• Within defined timescales
• Auto Enrol EJs into a QWPS
• Allow NEJs to Opt-In and pay contributions
• Allow EJs to Opt-Out and pay refunds
• Arrange for EWs to contribute

Do we need to set up a pension scheme if there are no eligible jobholders for automatic enrolment?”

• There is no need to have a pension scheme
• However, if staff ask to go into a pension

scheme…

• …

the council will need to set up a scheme wef 1st day of following month

• a local council has an ongoing duty to assess

all staff each time an employee is paid

Y

• u must…

.

• Keep records
• Y
• ur council must keep records compliant with its

workplace pension duties, including:

– the names and addresses of those enrolled – when contributions were paid – any opt-in and opt-out requests – its pension scheme reference or registry number – any information it sends to its pension provider

• for six years and opt-out notices for four years.

Y

• u may…

.

• Consider postponement initially
• And for new joiners after Staging Date
• From 1 day up to 3 months
• Pay more than the stipulated minimum

A QWPS could be…

• A Stakeholder Pension
• An Occupational Pension Trust
• A M aster Trust, multiple employers
• A Group of Personal Pension Plans
• National Employment Savings Trust(NEST)

Watch out for… … .

• Deductions Net or Gross from Net or Gross Pay
• M aternity Pay contributions may differ from

GPP* to Occupational Schemes

• NEST differs from other M aster Trusts
• Contribution Refunds for short service may be

withdrawn in future legislation

• * GPP = Group Personal Pension

Y

• u must not…

.

• Encourage staff to Opt-Out

X

• Offer any inducements to Opt-Out

X

• Offer jobs to people who agree to Opt-Out

X

• Try to make employees Self Employed

X

• Pay less than the stipulated minimum

X

• Ignore Auto Enrolment

X

What we do differently to many

• ther

advisors… .

Enrol M y Staff IFA Accountant Direct Insurer M aster Trust Nest Payroll Bureau Pre-Staging Consultancy

P P O O O O O

Pension Scheme Advice

P P O O O O O

O O O O O

Payroll Integration

P O P O P P P

Data Testing

P O O P P P P

Employee Communications

P O O P P P O

Registration with the Pensions Regulator

P O O O O O O

Ongoing Services

P O O O O P P

P P O P P O O

What next?

If you don’t know your Staging Date;

• Send your P

AYE Ref Number to: info@enrolmystaff.co.uk

• Provide staff list with DoB, gender, monthly

pay for a free report, includes status and contributions

• Contact Enrol M y Staff for advice

Thank you, do you have any questions?

Enrol M y Staff

is a trading style of The Enrolment Professionals Limited Fareham, Hampshire, PO14 3RP t: 01329 559130 e: info@enrolmystaff.co.uk w: www.enrolmystaff.co.uk