Pensions Auto-Enrolment, B&CE and Irvine Whitlock s Hourly Paid Employees. Presentation dated: 31 st July 2013

Transcription

1 Pensions Auto-Enrolment, B&CE and Irvine Whitlock s Hourly Paid Employees Presentation dated: 31 st July 2013

2 Agenda Auto-Enrolment A summary Building & Civil Engineering Pension Scheme Easybuild Auto-Enrolment How it works The Effects of Auto-Enrolment Hanson s proposals

3 Auto-Enrolment, a change in the law affecting everyone To help people save more for their retirement, the government requires employers to enrol their workers into a workplace pension scheme. This applies to those workers who aren t already in one, and who earn over 9,440 a year ( 787 a month or 182 per week); and are aged 22 or over; and are under State Pension age. Hanson UK is enrolling these workers into our workplace pension scheme on 1 August 2013.

4 Why is this happening The government s aim is to get more people to have another income, on top of the State Pension, when they come to retire. The full basic State Pension in is a week for a single person. Employers are enrolling their workers automatically into a scheme to make it easier for people to start saving.

5 Building & Civil Engineering Pension Scheme Easybuild

6 Easybuild Summary Early joiners Just a Company contribution of 5 per week More recently Employee had to contribute Minimum Employee contribution of 5 per week Company matches 100% Employee can increase contribution Company matches at 100%, up to maximum of 10 per week Life Cover is part of the scheme: Life Cover of 25,000 on death Accidental Death Benefit of an additional 25,000 Employee Accident Cover: From 25,000 for loss of both eyes, or a hand, or foot, or arm, or leg To 800 for loss of finger

7 Pension Membership in Irvine Whitlock 84 are currently eligible for B&CE Easybuild and most have taken up membership Currently Hanson does not grant IW Hourly Paid employees membership of any other Pension Scheme. WRA (Section 21) specified contributions to Easybuild, but this is not a qualifying scheme under AE legislation B&CE have started a new AE qualifying scheme - The People s Pension WRA 21.4 allows an alternative scheme to be used HIPS is a qualifying scheme under the Auto-Enrolment legislation

8 Auto-Enrolment How it works

9 If you ARE a current member of HIPS You will not be automatically enrolled as you are already in the pension Hanson Industrial Pension Scheme is a qualifying scheme for purposes of Auto-Enrolment. It exceeds the Government s new standards. But Note: If an employee is under 75, works or usually works in the UK, and earns over 5,668 a year (the amount set by the government for this): We must by law continue to maintain your membership of a scheme that meets certain government standards; and If your membership of such a scheme ends (and it is not because of something you do or fail to do), we must by law put you into another scheme that meets government standards straightaway.

10 If you are NOT already a member of HIPS If you are NOT already in our workplace pension scheme on 1 August 2013, what happens depends on how old you are and how much you are earning on that date. There are three Scenarios Eligible Worker - On that date you are aged 22 or over, under State Pension age, work or usually work in the UK, and earn more than 9,440 a year ( 787 a month or 182 per week). Entitled Worker - On that date you are aged under 22 years, or over State Pension age (but under 75), or earn more than 5,668 ( 473 a month or 109 per week) but not more than 9,440 a year ( 787 a month or 182 per week) Non Entitled Worker - On that date you are under 75 and earn 5,668 or less a year ( 473 or less a month OR 109 or less a week)

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12 Eligible Workers If on that date you are aged 22 or over, under State Pension age, work or usually work in the UK, and earn more than 9,440 a year ( 787 a month or 182 per week). We will enrol you into our pension scheme on 1 August You don t have to do anything it will happen automatically. You can choose to opt out of the scheme if you want to, but if you stay in you will have your own pension which you get when you retire; Hanson UK and you will pay into it every month; The government will also contribute through tax relief; Your pension belongs to you, even if you leave us in the future; You have the right to join the scheme before 1 August 2013 if you want to.

13 Entitled Worker If on that date you are aged under 22 years, or over State Pension age (but under 75), or earn more than 5,668 ( 473 a month or 109 per week) but not more than 9,440 a year ( 787 a month or 182 per week) We will NOT be automatically enrolling you into the pension scheme. This is because you do not meet the criteria set by the government. However, you have the right to join the scheme if you want to. Both you and Hanson UK would pay into it.

14 Non-Entitled Worker If on that date you are under 75 and earn 5,668 or less a year ( 473 or less a month OR 109 or less a week) We will NOT be automatically enrolling you into our workplace pension scheme. This is because you do not meet the criteria set by the government. However, if you ask us to do so, we will enrol you into a pension scheme. Both you and Hanson UK would pay into it.

15 HIPS The Auto-Enrolment Pension Scheme The pension scheme being used is Hanson Industrial Pension Scheme. The scheme is an occupational pension scheme run by a Trustee Board on behalf of the pension members and administered by Capita Employee Benefits. HIPS had 3 benefit levels. With Auto-Enrolment we will be adding a 4th. The original 3 levels will remain for Enhanced Members, adding in the Auto-Enrolment level, all paying in a different percentage of Pensionable Pay. Employee Contribution Employer Contribution Life Cover 4 times salary Auto Enrolment 1% 1% No Enhanced Member 3% 5% Yes Enhanced Member 4% 7.5% Yes Enhanced Member 5% 10% Yes

16 Postponements and Waiting Periods Hanson is Postponing Auto Enrolment actions by three months. Therefore Auto Enrolment actions will be delayed until 3 months after the Staging Date or Joining Date. The Waiting Period of 6 months employment for eligibility to Enhanced Membership, will continue. Life Cover will still be effective from the time a full application form is received. Note: These rules are subject to various anomalies for employees who are currently within 6 months of joining or join between now and 1 August These anomalies are caused by circumstances around the transition and allow a few of these employees to have enhanced benefits earlier than will be standard.

17 Postponements and Waiting Periods - Examples Example 1: New Joiner completes application form for enhanced membership and sends it in after one month of employment: At one month the receive Life Cover At one month they receive 1% / 1% contributions At six months they receive enhanced contributions Example 2: New Joiner completes application form for enhanced membership and sends it in after four months of employment: At three months they are Auto Enrolled and receive 1% / 1% contributions At four months they receive Life Cover At six months they receive enhanced contributions

18 The Effects of Auto-Enrolment Hanson s proposals

19 The Complexities of Auto-Enrolment and B&CE Easybuild is closing to new members and opening a new qualifying scheme called The People s Pension. Hanson and B&CE have discussed this change at length. The complexity of the AE legislation and the contribution rules within The People s Pension, make it impossible for the Hanson payroll system to complete the AE calculation required by the legislation. A middleware solution was considered, via B&CE, to overcome this. But the multiple payrolls and pay dates make this impractical for the payroll department.

20 Hanson s Proposal for Complying with Auto-Enrolment Hanson will select HIPS as its qualifying pension arrangement Company contributions to B&CE Easybuild will cease 1 August 2013 Hanson will not be utilising the B&CE People Pension HIPS benefits are significantly greater than The People s Pension : o Company contributions of between 5% and 10% of pensionable salary o 150% matching HIPS death benefit of 4x Pensionable Salary is a significant additional benefit: Generally 5x more than WRA requirements Pension and Death benefit increases are proposed to be balanced out by removal of Accident Benefit Scheme.

21 Pension Benefits Already Accrued in B&CE If an employee no longer has contributions going into Easybuild, they will become a deferred member of that scheme. The value of the Easybuild pension pot will continue to grow and pension benefits can be withdrawn in accordance with the normal rules of the scheme.

22 What do all employees have to do NOTHING until 1st August 2013 If you want to opt out of the HIPS pension scheme after 1 st August obtain an Opt Out form from Capita and send to Payroll If you want to stay in the pension scheme - you don t have to do anything. Your personal details will be passed to Capita Employee Benefits Your pension will start building from the first payday after 1 August 2013, when the first pension payments will be made. You will be able to see this on your payslip

23 Sources of Information Announcements already made broad indications only Letters from Company detailed information 24 th May 2013 End July Beginning of August Websites Unite and external site Scheme Booklet and investment information Key contacts: Capita Employee Benefits Payroll HR Services