We keep charities on the right path. Slides available online: - - PowerPoint PPT Presentation
WE ENCOURAGE WE ENFORCE WE EDUCATE WE SHARE We keep charities on the right path. Slides available online: http://www.oscr.org.uk/about/meet-the-charity-regulator-2016 www.oscr.org.uk ScotCharityReg Meet the Charity Regulator 2016 Shetland
We keep charities on the right path.
www.oscr.org.uk
ScotCharityReg
WE ENCOURAGE WE EDUCATE WE ENFORCE WE SHARESlides available online: http://www.oscr.org.uk/about/meet-the-charity-regulator-2016
www.oscr.org.uk
Meet the Charity Regulator 2016 Shetland
Jude Turbyne
Head of Engagement, Scottish Charity Regulator
Slides available online: http://www.oscr.org.uk/about/meet-the-charity-regulator-2016
www.oscr.org.uk
10 years of regulation
www.oscr.org.uk
The vision
Charities you can trust and that provide public benefit
www.oscr.org.uk
Survey headlines
81% of the public* surveyed said trust was very important or fairly important when determining how much time, goods or money to donate to charity
fairly important
fairly important
* General public. Base 1,010 Scottish adults, Feb-Mar ** Base 1,215 Scottish charities Feb-Mar 2016
www.oscr.org.uk
Importance of trust when donating to charity
How important is your trust when it comes to determining how much money, goods or time you choose to donate to a charity? General public. Base 1,010 Scottish adults, Feb-Mar 2016
www.oscr.org.uk
Is charity regulation important?
General public. Base 1,010 Scottish adults, Feb-Mar 2016
The Office of the Scottish Charity Regulator is an independent body responsible for registering and regulating charities in Scotland. How important do you personally regard this role?
www.oscr.org.uk
Thinking about your organisation’s status as a registered charity, how important or unimportant is this status to your organisation? Base 1,215 Scottish charities Feb-Mar 2016
What do charities think – is charitable status important?
www.oscr.org.uk
OSCR does its best to minimise the burden of regulation on charities (71% in 2016, 66% in 2014). I trust OSCR to treat charities fairly (93% agree in 2016, 92% agreed in 2014) Completing the annual return for OSCR is just part and parcel of what we do now (94% agree in 2016, 92% agreed in 2014) OSCR is an innovative regulator (53% agree in 2016, 52% agreed in 2014) The Scottish Charity Register should feature more about charities’ finances (51% agree in 2016, 49% agreed in 2014) Base 1,215 Scottish charities Feb-Mar 2016
Opinions of OSCR
www.oscr.org.uk
Overall, what impact does being registered as a charity have on your
Base 1,215 Scottish charities Feb-Mar 2016
Impact of being a registered charity
www.oscr.org.uk
Keep a public register of charities Determine if bodies are charities Encourage, facilitate and monitor compliance Identify and investigate misconduct in charities Help the public have more confidence in charities Help charity trustees to understand and comply with their legal duties Keep registration & reporting straight- forward and proportionate Continually improve the way we
deliver services Give information
Scottish Ministers
Statutory Functions of the Scottish Charity Regulator Strategic Objectives 2014-17 OSCR
www.oscr.org.uk
10 years of regulation
register – 100K searches every month
Organisation in 2011 – now accounts for almost 50% of new applications
Scotland
www.oscr.org.uk
The proportionality challenge
£100,000 income £25,000 income
(7%) income not known (mainly new charities)
24,000 charities on the Scottish Charity Register
www.oscr.org.uk
Changing environment
reliance on donations, diversification of activities, press and public scrutiny
The modern charity can be quite different from ‘traditional’
www.oscr.org.uk
Our response – Targeted Regulation
governance
may damage public trust and confidence
to inform and focus our activities in the right areas
are transparently and publicly accounted for
www.oscr.org.uk
What can you do to help
info, annual report & accounts
you make – go digital!
from service users or the public/ donors
Transparency is key to public trust
www.oscr.org.uk
Advertise your charitable status
guidance if you don’t know the requirements
the link for your register entry
and proudly display your charity number
link back to your entry on the Scottish Charity Register
www.oscr.org.uk
Things to note
From us:
FAQs, social media guidelines, banking guidelines, good governance page Elsewhere in the sector:
www.oscr.org.uk
Where to get help
Local and national support available
www.oscr.org.uk
David Robb, Chief Executive Scottish Charity Regulator
Remember! Slides available - : http://www.oscr.org.uk/about/meet-the-charity-regulator-2016
We keep charities on the right path.
www.oscr.org.uk
ScotCharityReg
WE ENCOURAGE WE EDUCATE WE ENFORCE WE SHAREJude Turbyne. Head of Engagement, Scottish Charity Regulator
www.oscr.org.uk
Targeted Regulation: The changes you will see
www.oscr.org.uk
Persons acting as charity trustees while disqualified A charity trustee acting improperly A charity being used for/a victim of criminal activity Charities operating in a “fragile states” Charities that repeatedly fail to meet their reporting requirements to the regulator Charities taking action without seeking prior consent Charities that are not providing public benefit Individuals/organisations inappropriately benefitting from charitable status Charities at the margins of the charity test or who have complex/novel structures Bodies/individuals representing themselves as charities
Risk Framework
www.oscr.org.uk
guidance to help included online
about governance
Annual Return Questions
www.oscr.org.uk
piece of mind
Reporting
www.oscr.org.uk
Why?
Which charities?
accounts before publishing on our site So … we would love you to supply us with a link to your accounts
Getting accounts
www.oscr.org.uk
Notifiable events
Fraud and theft Substantial financial loss Incident of abuse or maltreatment of vulnerable beneficiaries Not enough charity trustees to make a legal decision Charity subject to criminal investigation by another regulator or agency Significant sums of money or
unknown source Suspicion that charity/charity assets being used to fund criminal activity A charity trustee is acting while disqualified.
www.oscr.org.uk
What’s it for, and what we want to see
public want to know what you are doing to help
…
Trustee Annual Report
www.oscr.org.uk
www.oscr.org.uk
Scottish Fundraising working group looking at how to achieve a Fundraising Regulatory system which:
fundraising
What’s happening at the moment
www.oscr.org.uk
Fundraising Regulator
regulatory framework Three
www.oscr.org.uk
it relatively light
centre
popular
Consultation results
www.oscr.org.uk
and presented to Ministers
July
What’s next
www.oscr.org.uk
Thank you …. Any questions?
www.oscr.org.uk
Questions?
www.oscr.org.uk
Meet the Charity Regulator Scottish Charity Regulator Neil Wilson Industry liaison manager Tuesday 17 May 2016
Automatic enrolment
An Introduction
The information we provide is for guidance only and should not be taken as a definitive interpretation of the law. Topics
Why is automatic enrolment being introduced?
Past and predicted trends in the life expectancy period of 65 year7 million people are under-saving
There are currently four people of working age for every pensioner by 2050 there will be just two.
Automatic enrolment legislation gives employers a duty to:
automatically enrol all staff who are eligible (‘eligible jobholders’) other staff who have the right to ask to opt in or join a pension communicate to their staff manage opt outs and promptly refund contributions every three years, automatically re-enrol staff who are eligible complete a declaration of compliance with the regulator keep records maintain payments of pension contributions
The employee safeguards mean that employers:
must not induce staff to opt out or cease membership of a pension, and must not indicate, when recruiting new staff, that the decision to employ
them will be influenced by whether or not they intend to opt out.
Overview of legal duties and safeguards
Customising the steps for different employers
Staging
– the duties apply to all of the employer’s workers from that date.
schemes that were being used on 1 April 2012. – After 1 April 2012, any change to the PAYE schemes being used will have no effect on the staging date.
Staging dates for new employers (post 1 April 2012)
PAYE income is first payable in respect of any worker Staging date
From 1 April 2012 up to and including 31 March 2013 1 May 2017 From 1 April 2013 up to and including 31 March 2014 1 July 2017 From 1 April 2014 up to and including 31 March 2015 1 August 2017 From 1 April 2015 up to and including 31 December 2015 1 October 2017 From 1 January 2016 up to and including 30 September 2016 1 November 2017 From 1 October 2016 up to and including 30 June 2017 1 January 2018 From 1 July 2017 up to and including 30 September 2017 1 February 2018
Staging profile
(excludes those without eligible jobholders and employers with no workers) Very large volumes staging from January 2016 * Based on age and earnings data from HMRC We estimate* that up to a million employers yet to stage will have full automatic enrolment duties Who is included in the automatic enrolment duty?
A person may be subject to the automatic enrolment legislation if they are:
... whether or not they are full time or part time, permanent or temporary. There may also be other people who are included:
However, the truly self employed are not subject to automatic enrolment.
* the Channel Isles and the Isle of Man are outside the UK
Who is excluded?
Exclusions from automatic enrolment duties include:
trustees, elected members) - but they are only excluded for the activities they carry out as an office holder;
that company (but only for the work they carry out for that company). However, employers may choose whether or not to automatically enrol certain people who trigger automatic enrolment, including individuals* who:
(duties continue to apply in full to ‘salaried members’);
Is your client considered the ‘employer’?
Where someone:
client), or
individual: then your client is considered to be the ‘employer’ (ie the ‘employer’ is the legal entity named in the contract). Otherwise:
because they work for an agency or their own limited company), your client will not be considered the employer and so will have no AE duties for them.
agency, that company will have the responsibility for any automatic enrolment duties, not your client.
What if someone says they are self-employed?
should not assume that this person is exempt from automatic enrolment … unless they are a director of your client’s company, as a director who is not working under an employment contract is exempt.
subcontract the work or freely substitute somebody else to do it … if so, then your client will not have any automatic enrolment duties for the individual.
expected to do the work themselves (unless they are unable to do it themselves, eg they are on holiday or sick) … then they are considered to have a ‘personal contract’ to perform work
individual is doing the work as part of their own business.
Is someone working as part of their own business?
If someone (who is not a director) considers themselves self-employed and has a ‘personal contract’:
– have control of the hours they work? – provide any employee benefits? – bear all the significant financial risks in carrying out the work (eg the worker is not financially responsible for their faulty work)? – consider the individual to be part of their own organisation? – provide what is required for the individual to carry out the work (eg tools)? If most or all of the above are true, it would be reasonable to consider that the individual is not undertaking the work as part of their own business and so are subject to automatic enrolment.
To tell us you are not an employer
– it is a sole director company, with no other staff – it is a company with more than one director, where no more than one director has an employment contract – the company has ceased trading – the company has gone into liquidation or has been dissolved Tell us at
– have no staff to enrol on their staging date, or – for companies in administration or in non-terminal insolvency
Qualifying earnings Age range 16-21 22-SPA* SPA*-74
Under £5,668† pa Between £5,668 pa and up to £9,440† pa Non-Non-Eligible Jobholder Non-Eligible Jobholder Eligible Jobholder More than £9,440† pa Non-Eligible Jobholder
* SPA = State Pension Age ** Figures for 2016/17 Up to £5,824** pa Over £5,824 pa and up to £10,000** pa More than £10,000** pa Eligible jobholder
Employer must automatically enrol eligible jobholders into an automatic enrolment pension schemeWorker categories
Non-eligible jobholder
Non-eligible jobholder Non-eligible jobholder
Non-eligible jobholders canEntitled worker
Can request to join a pension scheme AE earnings trigger v Pay Reference Periods 2016-17†
Pay Reference Period/Cycle Earnings trigger for automatic enrolment Annual £10,000 pa Bi-annual £4,998.00 1 quarter £2,499.00
1 month £833.00
4 weeks £768.00 Fortnight £384.00 1 week £192.00
† For other Pay Reference Period (PRP) durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00) or number of months by the monthly amount (eg £833.00) etc - or pro-rata if not an exact multiple of any of the above. The Secretary of State will review these figures each tax year. Are joiners entitled to an employer contribution? 2016-17
Pay Reference Period/Cycle Those earning this
to an employer contribution Earnings trigger for automatic enrolment Annual £5,824 pa £10,000 pa Bi-annual £2,912.00 £4,998.00 1 quarter £1,456.00 £2,499.00
1 month £486.00 £833.00
4 weeks £448.00 £768.00 Fortnight £224.00 £384.00 1 week £112.00 £192.00
N.B. The Secretary of State will review these figures each tax year. Assessing your staff
– unless they choose to use ‘postponement’ (described in later slides).
(ie eligible jobholder, non-eligible jobholder or entitled worker).
these pay elements (an employer should use their reasonable judgement): – salary/wages, commission, bonuses, overtime and some statutory payments (excluding expenses and dividends).
– but any active member of a ‘qualifying’ pension scheme with that employer will not need to be automatically enrolled.
– assess all new staff who join them – assess some staff every pay period (see slide on ‘Monitoring eligibility’) – assess some staff again every three years (see slide on ‘Re-enrolment’).
Postponement
assess and can be used: – at the employer’s staging date for any or all existing staff – on the first day of employment for any new joiner after the staging date, and – on the date a member of staff meets the criteria to be an eligible jobholder.
and a day of the start of postponement.
– automatically enrol eligible jobholders, and – for those staff not eligible, monitor them each future pay period.
Postponement does not change or delay the staging date Monitoring eligibility for automatic enrolment
worker who: i. is not an active member of a qualifying pension scheme, and ii. is not under postponement or the transitional period, and iii. has not previously been automatically enrolled (or assessed as an eligible jobholder whilst an active member of a qualifying schemeϮ).
automatically enrolled (or postponed).
the next cyclical re-enrolment date (see slide on cyclical re-enrolment).
Ϯ A worker who has simultaneously been an eligible jobholder and an active member of a qualifying
scheme since the later of:
Check suitability of payroll and IT systems
– the assessment – enrolment – communications, and – calculation of pension contributions If their payroll software does not do all of the above, non-payroll software or services could be used.
should be checked for accuracy before staging.
Choosing a pension
their staging date if they have someone to automatically enrol on this date.
scheme does not need to be set up ... – but it may be useful to decide which pension would be used if someone asks to join or meets the criteria to be automatically enrolled.
any request to contribute to other schemes.
to check that it can be used and is qualifying. For more information go to www.tpr.gov.uk/what-to-consider-when-choosing-a-scheme.aspx
Steps for those who have to provide a pension
Pensionable earnings
definition (eg basic pay).
– pension contributions are determined by the rules of the scheme, and – will be based on banded earnings between the lower earnings threshold and upper earnings limit (currently £5,824*pa and £43,000*pa).
can self certify if the scheme meets certain minimum criteria: – ‘Set 1’ - if basic pay from £1 is pensionable, or – ‘Set 2’ - if at least 85% of total pay (scheme average) is pensionable, or – ‘Set 3’ - if 100% of total pay is pensionable.
* Pro-rata of annual amount used in each Pay Reference Period. These figures are for 2016-17. The Secretary of State will review this amount each tax year. Thresholds v Pay Reference Periods (PRP) 2016-17†
Pay Reference Period/Cycle Lower Earnings Threshold (LET) Earnings trigger for automatic enrolment Upper Earnings Limit Annual £5,824 pa £10,000 pa £43,000.00 pa Bi-annual £2,912.00 £4,998.00 £21,500.00 1 quarter £1,456.00 £2,499.00 £10,750.00
1 month £486.00 £833.00 £3,583.00
4 weeks £448.00 £768.00 £3,308.00 Fortnight £224.00 £384.00 £1,654.00 1 week £112.00 £192.00 £827.00
† For other Pay Reference Period (PRP) durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00) or number of months by the monthly amount (eg £833.00) etc - or pro-rata if not an exact multiple of any of the above. N.B. The Secretary of State will review these figures each tax year. Min DC 8% total* Min DC 5% total* Minimum DC 2% total contribution*
DC scheme minimum contributions
April 6th 2019 † April 6th 2018 †*% of qualifying earnings Minimum DC 1% employer contribution* Min DC 2% employer* Min DC 3% employer*
Phase 1 Phase 2 Phase 3
Oct 2012 May 2017 April 2014 June 2015 Large employers Medium employers Small/micro employers New employers Feb 2018 † Subject to parliamentary approval What pension schemes can be used?
must be registered in the UK or EEA* must have no barrier to automatic enrolment must be a qualifying scheme
Automatic enrolment scheme Qualifying scheme
must be tax registered: and meet minimum criteria
Workers already active members of a qualifying scheme do not need to be automatically enrolled Must be used for automatic enrolment and ‘opt ins’ Employers will need to contribute to the pension scheme *European Economic Area states Employers may also use a qualifying schemeentitled workers
scheme is registered Employers are not required to make an employer contribution Can clients use an existing pension scheme?
If clients have an existing scheme, it may not be suitable for automatic enrolment.
– the contributions due must be at or above the minimum criteria – if it is a personal or GPP contract-based scheme, it is likely to need a jobholder agreement for each active member. If it is not a qualifying scheme, it may be possible to change the scheme rules to make it qualifying. Active members of a pension which is not qualifying would need to be assessed and, if eligible, automatically enrolled into another pension.
– the pension must have no barrier to automatic enrolment (eg default fund). The existing pension provider may not allow it to be made a qualifying scheme or an automatic enrolment scheme - check with the pension provider.
Choosing a new pension - how to find one
– National Employment Savings Trust (NEST) is a pension scheme that all employers can use to meet their duties.
– the master trust assurance framework provides an independent review against an industry-wide benchmark of quality – these features in our DC code represent the standards of governance and administration that we expect trustees to attain – we list those schemes that have said they’re open to all small employers looking for a scheme provider for automatic enrolment
– Pensions and Lifetime Savings Association (PLSA) Pension Quality Mark – The Association of British Insurers (ABI) list of GPP providers
workers.
for example: – charges (there is an annual 0.75% charge cap on the default fund) – choice of funds other than the default strategy (eg Sharia,ethical) – options at retirement and/or from age 55 (eg drawdown options) – whether they provide ‘one pot per member’ and rules on transfers – how tax relief is applied (eg through payroll or by the pension provider) – online member services – member communications (may be available in multiple languages)
www.tpr.gov.uk/choosing-a-pension-scheme.aspx
Choosing a new pension - factors to consider
Tax relief: two mechanisms
ways that the tax relief on staff members’ pension contribution can be applied: – Net Pay Arrangement – Relief at Source (‘not Net Pay Arrangement’)
pension providers allow the employer to choose either method.
miscalculating the contributions and tax due.
www.tpr.gov.uk/what-to-consider-when-choosing-a-scheme.aspx
Opting in and joining
postponement.
entitled workers and this could vary over time.
employers need to: – assess the worker, to see if they are a jobholder or entitled worker, then – enrol jobholders into an automatic enrolment scheme, and – enrol entitled workers into a scheme of the employer’s choice.
active membership (eg the pension scheme should have a default fund).
Opting out
– requests to opt out must be handled by the scheme provider, and – completed forms would normally be sent to the employer.
once the worker is an active member of the pension scheme, or when the employer gives a notice of enrolment letter/email to the worker.
membership of the pension scheme (under the scheme rules).
who has opted out does not need to be assessed again until the employer’s next re-enrolment date (occurs approx every 3 years).
Communicating to staff
rights: – enrolment – when using postponement – and to explain a worker’s right to opt in or join a scheme.
(eg by letter, email, HR web portal).
www.tpr.gov.uk/writing-to-your-clients-staff.aspx
* Postponement 6 weeks from the day after the assessment date
Record-keeping
scheme used to comply with the employer duties (pension providers and trustees will also have duties to keep records).
any records, as long as these records can be produced in a legible way.
must be kept for four years.
(for example, this may be as a result of a whistle-blower alert).
Cyclical re-enrolment
re-enrolment date which can be any day, up to 3 months before or after the third anniversary of their staging date, or previous re-enrolment date (eg an employer who staged on 1 Oct 2013 may choose any day between 1 July and 31 Dec 2016).
jobholder) automatically re-enrolled† if these conditions apply: – they are not already an active member of a qualifying scheme; and – they are not being monitored every pay period (ie they have previously been automatically enrolled or assessed as an eligible jobholder whilst an active member of a qualifying scheme); and i. they opted-out or ceased membership of a qualifying scheme more than 12 months ago - or ii. if they opted-out or ceased membership of a qualifying scheme within the previous 12 months - and the employer wishes to automatically re- enrol them (ie the employer can choose whether to do this or not).
Declaration of compliance
– and it must be completed within five months of the staging date and – within five months of the 3rd anniversary of the staging date (or previous automatic re-enrolment date) - this change was effective 6 April 2016*
declaration on time.
– which pension schemes were used to comply with the duties, – (after cyclical re-enrolment only) their chosen automatic re-enrolment date, – the number of eligible jobholders automatically enrolled into each scheme.
before the declaration can be completed.
* Previously the deadline for re-declaration was two months after the chosen re-enrolment date.
Customising the steps for different employers
Support for business advisers on our website
Any questions?
Useful tools
https://automation.thepensionsregulator.gov.uk/Nomination
https://automation.thepensionsregulator.gov.uk/LetterCode
https://automation.thepensionsregulator.gov.uk/notanemployer
https://www.autoenrol.tpr.gov.uk/
www.tpr.gov.uk/employers/employer-contributions.aspx
www.tpr.gov.uk/employers/tools/staging-date.aspx
Useful links
www.tpr.gov.uk/automatic-enrolment-enquiries.aspx
www.tpr.gov.uk/docs/the-essential-guide-for-automatic-enrolment.pdf
www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx
www.tpr.gov.uk/completing-the-declaration-of-compliance.aspx
www.tpr.gov.uk/writing-to-your-clients-staff.aspx
registration, choose “I require pension automatic enrolment files” https://communicationcentre.dwp.gov.uk/dwp/index.php
www.tpr.gov.uk/doc-library/ae-presentations.aspx
We are here to help! Request a guest speaker: https://secure.thepensionsregulator.gov.uk/speaker-request.aspx Contact us at: www.tpr.gov.uk/contact-us.aspx Subscribe to our news by email: https://forms.thepensionsregulator.gov.uk/subscribe.aspx
Thank you
The information we provide is for guidance only and should not be taken as a definitive interpretation of the law. Additional slides
Useful links
More information about pensions:
www.tpr.gov.uk/employers/finding-a-provider.aspx
www.abi.org.uk/Insurance-and-savings/Products/Pensions/Saving-into-a- pension/Automatic-enrolment/Providers
www.pensionqualitymark.org.uk/pqmreadyschemes.php
www.nestpensions.org.uk
www.tpr.gov.uk/find-a-new-pension-scheme-for-clients.aspx
* the voluntary master trust assurance framework was developed by the Institute of Chartered Accountants
assurance that their scheme governance and administration meet an industry-wide benchmark of quality.
Useful links
More information about pensions and automatic enrolment:
www.moneyadviceservice.org.uk/en/articles/choosing-a-financial-adviser www.financialplanning.org.uk/wayfinder
www.cipp.org.uk/en/Pensions/friends-of-automatic-enrolment/
www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf www.tpr.gov.uk/docs/introduction-code-13.pdf
Useful links - webinars and videos
www.tpr.gov.uk/press/webinar-your-automatic-enrolment-questions-answered-by-
www.tpr.gov.uk/press/webinar-common-automatic-enrolment-challenges- november-2015.aspx
www.tpr.gov.uk/press/automatic-enrolment-webinar-whats-my-role-business- adviser.aspx
www.tpr.gov.uk/press/webinar-automatic-enrolment-for-business-advisers.aspx
www.tpr.gov.uk/press/webinar-automatic-enrolment-declaration-of- compliance.aspx
What services will you offer your clients?
Decide what services you will offer and what services you will not offer
Checking your clients’ start (staging) date Being a point of contact Checking who to put into a pension scheme Creating your clients’ action plan and working out your clients’ costs Checking records and payroll processes Choosing a pension Assessing and enrolling staff Writing to your clients’ staff Completing the declaration of compliance Explaining your clients’ ongoing duties
The FCA regulations and choosing a pension
automatic enrolment.
regulated activity.
an adviser has the appropriate Financial Conduct Authority authorisation.
an employer or as an individual (eg where the client might join the pension themselves).
employer is provided to them in their capacity as an employer and not as an individual.
Relief at Source (‘not Net Pay Arrangement’)
For this tax relief mechanism: – only 80% of the calculated contribution is deducted because ... – ... the member’s pension contribution will be taken after tax has been deducted, and – the pension provider claims 20% tax back from HM Revenue & Customs (HMRC) and adds it to their pension pot.
return in order to reclaim the rest of the tax paid on their contributions.
year in 2016/17) do not pay tax, but they would still get the 20% tax relief (even though they haven’t paid any income tax on their contributions).
pension which operates Relief at source.
trust pensions usually calculate tax relief this way.
Net Pay Arrangement
For this tax relief mechanism: – no tax is payable on the member of staff’s pension contributions, so the employer deducts 100% of the contributions due, and – pays them to the pension provider (ie gross of tax).
£10,800 in 2016/17), the member will not get any tax relief benefit.
full tax relief through payroll without having to complete an HMRC Self Assessment tax return.
use this mechanism.
Tax relief example
A weekly paid member of staff, has a basic salary of £10,400 per annum and:
[the employer will also pay a contribution, but this is not affected so is not shown]. Under Net pay arrangement:
pension pot and
they don’t pay income tax and are not able to claim any money from HMRC,
Alternatively, under Relief at source:
Is a director a worker?
and
contract of employment
classed as a worker
same company.
triggers automatic enrolment, the employer can choose whether or not to automatically enrol or re-enrol them (the director will have the right to Opt in or join a pension).
Type of work contract between the individual and this company Employer duties apply to this individual?
Sole director/employee - Peter (who is a director of this company with an employment contract)
X
Additional director - Sarah (not on an employment contract)
X
Additional director - George (not on an employment contract)
X
Additional director - Linda (has a written contract of employment)
√ (Peter* and Linda)
Example of sole employee/director exemption
* As there are two directors with contracts of employment, duties apply to both Peter and Linda. This would be the same even if Linda was not a director and was just an employee - Peter’s exemption would stop when she joined. However, from 6 April 2016, an employer can choose whether or not to automatically enrol/re-enrol any directors who become eligible. New exceptions – employed directors and LLP partners
enrolment, then the employer may choose whether or not to automatically enrol/re-enrol them:
HMRC tax rules (duties continue to apply in full to salaried members);
least one other employee working for the company (ie the sole employee/director exemption does not apply).
and the employer will still need to make a declaration of compliance whether
Exception - staff in notice period
If notice is given or received by a member of staff (eg resignation or dismissal):
then the employer does not have to enrol them. During their notice period that member of staff does not have a right to opt in or join a pension. If notice is withdrawn, then the enrolment duty will be effective from this date.
Exception - workers with HMRC tax protection
Where an employer has ‘reasonable grounds to believe’ (eg the worker shows them documentary evidence) that a worker has HMRC tax protected status for their pension savings (eg Primary, Enhanced or Fixed protection):
The worker would still have the right to opt in/join.
Exception - workers who have ceased active membership - i
they had previously contractually joined a qualifying pension scheme* (even if before the employer’s staging date), then:
then the employer may choose whether or not to automatically enrol them (if the employer chooses not to automatically enrol them, the employer should leave them until the cyclical re-enrolment date);
they should not be automatically enrolled, but should be left until the cyclical re- enrolment date.
ceased membership of that scheme, should not be assessed until the cyclical re- enrolment date. This means an employer could choose not to assess any worker who has previously been an active member of a qualifying scheme - until the cyclical re-enrolment date.
* or a pension scheme that would have been a qualifying scheme if the worker had been a jobholder when they ceased Exception - workers who have ceased active membership - ii
On the cyclical re-enrolment date, the employer should identify workers:
before the employer’s staging date)
scheme and either opted out or ceased membership of that scheme. These workers should be assessed on the cyclical re-enrolment date and, if an eligible jobholder, automatically re-enrolled - unless:
the cyclical re-enrolment date - in which case, the employer may choose whether
If the employer chooses not to automatically re-enrol them, the employer will have no duty to re-enrol them until the following cyclical re-enrolment date.
* or a pension scheme that would have been a qualifying scheme if the worker had been a jobholder when they ceased Exception - workers with winding-up lump sums
For a worker who has: i. ceased membership of a defined contribution (DC) scheme, and ii. been paid a Winding-Up Lump Sum (WULS), and iii. ceased employment, and
then: if they have an automatic enrolment / re-enrolment date which falls up to 12 months after the payment of the WULS,
next cyclical re-enrolment (and the re-employed worker does not have the right to opt in or join during the 12 months after a WULS payment)
after the payment of the WULS,
re-enrolment date
DC self certification during phasing period
† Subject to parliamentary approval Up to 5 April 2018 † 6 April 2018 to 5 April 2019 † From 6 April 2019 † Pensionable Salary (Basis of % Contributions) Set 1 (Tier 1) 2% Employer / 3% Total 3% Employer / 6% Total 4% Employer / 9% Total Scheme Definition (if >= basic pay from £1) Set 2 (Tier 2) 1% Employer / 2% Total 2% Employer / 5% Total 3% Employer / 8% Total 85% of Total Pay (scheme average) Set 3 (Tier 3) 1% Employer / 2% Total 2% Employer / 5% Total 3% Employer / 7% Total 100% of Total Pay For further details see the DWP guidance document: www.gov.uk/government/uploads/system/uploads/attachment_data/file/307083/money-purchase- schemes-guidance.pdf Using an existing contract-based pension scheme
– it needs to be tax registered – it needs to satisfy the minimum criteria (ie be at or above the legal min employer and total contributions, eg 1% and 2% before 6 April 2018 † ) – and, for a contract-based pension, the employer and pension provider must have a signed agreement, where the employer commits to pay at least the legal minimum employer contributions, and – unless the employer agrees to pay at least the legal minimum total contribution (eg 2% before 6 April 2018† ) - there must be a jobholder agreement for each active member (an agreement by the member to pay the difference between the employer contributions and the legal minimum total contribution).
also be a qualifying scheme).
† Subject to parliamentary approval What to communicate to workers
pension scheme must be provided with information* telling them about their right to opt in or join a pension scheme.
jobholders being enrolled after opting in) they must be provided* with: information about their enrolment what it means for them, including the contributions, and their right to opt out.
such as the length of the postponement period and their rights to opt in or join.
* See Useful links for template letters
Summary of deadlines
Action/Communication Deadline Letter to workers who are not already in a qualifying pension scheme at staging 6 weeks after staging Joining window, enrolment notifications and transitional period notices 6 weeks from the assessment date (eg before midnight of Tuesday 12 May, if assessed Wednesday 1 April). Eddie is not an employee, but is he subject to AE?
Eddie is a self employed graphic designer who regularly works for Acme Workshops Ltd, but works for other clients too. Eddie’s contract with Acme does not permit him to send a replacement. Eddie designs all of Acme’s flyers and magazine ads and also designs and updates their website. Eddie generally works from home, but sometimes he works in Acme’s offices. He uses his own equipment to print the flyers and if something goes wrong with the printing he produces a replacement batch at his own expense. When he is given a project to do, Acme set a deadline, but leave it up to him to plan when, where and how the work will be done. Eddie invoices Acme at the end
Question - Should Acme Workshops consider Eddie to be subject to AE?
Eddie is not an employee, but is he subject to AE?
Eddie is a self employed graphic designer who regularly works for Acme Workshops Ltd, but works for other clients too. Eddie’s contract with Acme does not permit him to send a replacement. Eddie designs all of Acme’s flyers and magazine ads and also designs and updates their website. Eddie generally works from home, but sometimes he works in Acme’s offices. He uses his own equipment to print the flyers and if something goes wrong with the printing he produces a replacement batch at his own expense. When he is given a project to do, Acme set a deadline, but leave it up to him to plan when, where and how the work will be done. Eddie invoices Acme at the end
Eddie cannot reasonably be considered a worker, so is not subject to AE, as: i) he markets his services to other clients, ii) he uses his own equipment iii) he works unsupervised and iv) he guarantees the quality of his work.
Karen is a self employed IT professional who works full time for Acme Workshops Ltd, supporting their in house payroll system. She works in a team alongside Acme’s own employees and, when she meets external contacts, uses business cards identifying her as a member of Acme’s staff. Although Karen usually works in Acme’s offices, she can work from home if she gets permission in advance. Whether she’s in the office or at home she uses a laptop and software provided by Acme. Karen is paid at the end of each month based on the number of days she has
makes a mistake in her work.
Karen is not an employee, but is she subject to AE?
Karen is a self employed IT professional who works full time for Acme Workshops Ltd, supporting their in house payroll system. She works in a team alongside Acme’s own employees and, when she meets external contacts, uses business cards identifying her as a member of Acme’s staff. Although Karen usually works in Acme’s offices, she can work from home if she gets permission in advance. Whether she’s in the office or at home she uses a laptop and software provided by Acme. Karen is paid at the end of each month based on the number of days she has
makes a mistake in her work. Karen can reasonably be considered a worker and subject to AE, because: i) she is integrated into Acme’s operation ii) she is subject to a degree of control by Acme iii) she uses their equipment and supplies, and iv) she does not guarantee her work.
Karen is not an employee, but is she subject to AE?
Support for employers: Duties checker
Duties checker: Before you begin
Tell us if you run a business
Is your business still active?
Do you employ anyone?
See your staging date
1
Your staging date
Do you employ anyone between 22 and SPA?
Do they earn more than £833 a month?
Employer classification
I am an employer who has to provide a pension
www.oscr.org.uk
Thank you and closing remarks