GETTING YOUR CLIENTS READY FOR AUTO ENROLMENT Questions and answers from the Webinar 30 January 2014

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1 GETTING YOUR CLIENTS READY FOR AUTO ENROLMENT Questions and answers from the Webinar 30 January 2014 For advisers only

2 Questions and answers from the Webinar 30 January Can you auto enrol into an existing Stakeholder Pension? Yes, you can in principle auto enrol into a Stakeholder Pension but all existing schemes need to be assessed to ensure they are fit for purpose. Our 5 stage get ready process for reviewing and upgrading existing schemes is on line. 2. Where there is a limited company with only two directors/owners, does auto enrolment still apply? Directors, rather than non executive directors, will typically be considered workers and normal auto enrolment rules apply. For more details refer to the Pensions Regulator s (tpr) detailed guidance on defining the workforce. 3. Would the ability for an existing scheme to become a QWPS depend on the number of employees or is it all to do with funds under management in that scheme? In some cases the client doesn t want to give full employee details in advance. In an existing QWPS with high contributions can you include new members on the legal minimum contribution? We take a number of factors for existing schemes into account such as FUM and average premiums. You could include new members on the legal minimum contribution but it would reduce the average contribution of the scheme which will be a consideration. 4. If someone breaks the postponement, i.e. opts in, do they have to be assessed at this point? What if they are entitled? Yes, they would have to be assessed because their eligibility status (entitled, non eligible or eligible) will determine whether or not there s mandatory payments. If the employer was going to voluntarily meet the minimum qualifying contribution levels for all employees regardless of eligibility status they wouldn t need to do the assessment. Consideration should be given to the administration cost versus explicit contribution cost sometimes paying more works out cheaper. Getting your clients ready for auto-enrolment 01

3 5. If an employee wishes to join during the postponement, are they in from a date within the postponement? Broadly, the rules are, if someone opts in it is effective from the first day of the next pay reference period. However, if their opt in date falls after the date they d be auto enrolled the normal auto enrolment rules would take precedence. 6. Where the employer has some employees already in a money purchase scheme, wants to stop contributions and move everyone to a single scheme, can the employer proceed with this action even although their contributions will be lower in the new money purchase scheme? From an auto enrolment perspective there are no barriers but it might depend what s in their contracts of employment. e.g if an employer has agreed to pay x but reduces to pay y then a change of contracts and consultation period may be required. 7. If an employer wants to bring their staging date forward how do they do this? Bringing a staging date forward has to be done at least one month before their new staging date. The on line process is detailed on tpr s Bringing your staging date forward site. bringing your staging date forward 8. Will Standard Life provide any middleware support for employers or does the business have to have their own middleware? Standard Life offers an eligibility tool as part of our packaged proposition and for no additional charge. However, as a general rule, we would advocate that employers manage their assessments in payroll as this is the source of most of the key information required for assessment (e.g. pay reference period earnings). Sending data to any third party for assessment and waiting for results to be returned will nearly always be more work for the employer and/or payroll. 9. Some businesses do not wish Director s salaries to appear on the administration system to pension administrative staff. Can your administrative system provide different levels of permissions to different company administrative staff? We have a number of solutions for segmenting a workforce and restricting administration access to certain members. For Good to go clients this would be achieved by applying for separate schemes and choosing different administrators for each scheme. Getting your clients ready for auto-enrolment 02

4 10. Does contract of employment joining remove auto enrolment duties for the employer? It doesn t remove duties but it can simplify them, e.g. contract joining on a qualifying basis before auto enrolment duties start so that under auto enrolment rules they can be assessed as already in a QWPS. Therefore no further action would be needed as long as they remain an active member (on a qualifying basis). 11. How do an employer s contributions differ between entitled and eligible employees? If the scheme members are entitled, any employer payments are voluntary. For scheme members who are eligible and non eligible, employer payments are mandatory. 12. When a waiting period is applied, is there any difference in the communication requirements between auto enrolees and employees already in the scheme? Communications will be different those already in scheme are simply told they are in a scheme (assuming they are on a qualifying basis, i.e. contributing at least as per minimum requirements). Those not in the scheme will typically get enrolment and postponement communications depending on how the scheme has been designed. 13. Is it possible to apply different waiting periods for different employees? Yes. For Good to go we support this where there is, for example, a monthly and weekly payroll but wouldn t offer this for employees on the same payroll frequency. 14. What level of support will Standard Life give for postponement and enrolment communications? There is currently a template letter available to use. From April 2014, and if requested when applying for a new scheme, we will produce and deliver both postponement and enrolment communications. Again this will be part of our packaged proposition with no additional charges. 15. If an eligible jobholder is enrolled and their subsequent earnings drop below the minimum, does a contribution still have to be paid? Normally contributions will continue, but it depends on their pensionable pay definition. For example, if using qualifying band earnings and they drop below LEL, contributions could stop until earnings increase above LEL again. Getting your clients ready for auto-enrolment 03

5 16. Can an employee s individual pension arrangements be used for auto enrolment? An employee s individual pension can be used subject to establishing it as a QWPS. At the very least, they d need to make sure they meet the minimum contribution requirements and establish a QWPS agreement between provider, employer and employee. Standard Life has a process and form in place for any employer willing to use individual plans as QWPS for select employees (typically directors and other senior employees). 17. Where a scheme has monthly and weekly paid staff how does that work for auto enrolment? Broadly speaking auto enrolment operates around their payroll cycle e.g. monthly paid workers need assessed at least 12 times a year and weekly paid workers need assessed at least 52 times a year. 18. Do you have any generic warm up letters for staff letting them know what is going to happen and is it correct that the compulsory letters have to happen after the first workplace assessment on the staging date up to six weeks after April? Standard Life has an employer microsite with all the info needed with communications templates. The employer can send these out along with compulsory letters or from April 2014 we ll be able to send these out. Postponement and enrolment notices currently have to be issued within six weeks of the event (the member being postponed or being enrolled respectively). Communications to existing members on staging date have to be issued within two months of the staging date. Getting your clients ready for auto-enrolment 04

6 To get a taste for yourself visit adviserzone.com/goodtogo Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Standard Life Assurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. goodtogopensions.com GEN Standard Life, images reproduced under licence