Welcome Hampshire Association of Local Councils Workplace Pensions 21 st September 2015

Transcription

1 Welcome Hampshire Association of Local Councils Workplace Pensions 21 st September 2015

2 Automatic Enrolment John Le Poidevin Member of the Pensions Management Institute s Auto Enrolment Accredited CPD Programme Nationwide 646 holders of this examination

3 The Team John Le Poidevin Ian Batterbee Liam McCann Ian Miles 40 years in Financial Services Director, IFA business 1990 to 2011 Compliance Officer 1995 to 2011 Pensions Specialist 1987 to date Auto Enrolment Consultant 24 years in financial services Independent Financial Adviser Contributor & development role - Annuity Direct 25 years in Accounting Services 15 years in the Civil Service Payroll processes and procedures 42 years in Procurement Supply chain, procurement & logistics Consultant Practiced in large-scale change management PMI Certificates in Pensions Auto Enrolment & Trustee Pensions Knowledge tpr s Trustee Toolkit Certificate PMI Automatic Enrolment Accredited CPD Programme. Pensions and consultancy roles in Norwich Union, Standard Life and Canada Life Dip Pfs Diploma in Financial Planning Member of the Chartered Institute of Management Accountants Business planning, budgeting and forecasting support for SMEs Supplier/client/stakeholder relations skills CIPS CIOB ICM

4 employees tax cost auto-enrolment Staging Date The Pensions Regulator Pension Funding additional categories certain pay Qualifying Workplace Pension Scheme Law understanding tpr Staff fines people QWPS paid choice normal ways postpone Opt-out Opt-in leavers changes Schemes Support enrol Planning Communications features use Non-eligible submissions Plans assessment Staff Pay-out relax provision value government people flexibility money safe created secure future ongoing receives

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

6 Does it affect my Council?

7 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.

8 It will not affect you if. Your Council employs fewer than one, (that is none) All Local council workers are Self Employed contractors, But. In accordance with HMRC rules Clerks and RFOs to local councils cannot be engaged as Self Employed contractors

9 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

10 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.

11 The Pension Solution Make 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

12 What does this mean for local councils? May need a qualifying pension scheme, or have a process in place for installing one in a timely manner Must issue statutory communications within prescribed timescales Must monitor workers on an ongoing basis for changes in age and earnings Must submit a Declaration of Compliance to the Pensions Regulator and keep appropriate records

13 What else must we do? Monthly gross earnings (2015/16) 486 and below Over 486 up to 833 Age State Pension Age State Pension Age - 74 ENTITLED WORKER (If they ask you to, you must provide a pension scheme for them, but you don t have to pay contributions) NON ELIGIBLE JOB 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 JOB 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 JOBHOLDER (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 JOB HOLDER (If they ask to be put into a pension scheme, you must put them in your qualifying pension scheme and pay regular contributions)

14 Date Employer minimum contribution Total minimum contribution Before 30/09/2017 1% 2% (including 1% staff contribution) 01/10/ /09/2018 2% 5% (including 3% staff contribution) 01/10/2018 onwards 3% 8% (including 5% staff contribution)

15 Pay reference thresholds Annual 1 week 1 month Lower level of qualifying earnings 5, Upper level of qualifying earnings 42, ,532

16 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?

17 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 , , ,000 Legislation breaches / non compliance will also invoke 400 Fixed Penalty where non compliance continues for each breach

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19 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, 13 th September 2013

20 Don t Delay

21 Letter from DWP advising of Staging Date Are all eligible employees members? Opt-in Employee decision Opt-out Eligible job holder to contact Pension Administrator Employee assessment required essential for primary or enhanced protection Evaluate Staff Have you communicated with your employees? Do you have a Pension Scheme? Do I need help? Tier 1 Contribute on basic salary Yes No Yes No Yes Is it a QWPS? No Can it be amended to QWPS? Yes No Non- Eligible Entitled Tier 2 Contribute on basic salary - >85% of collective gross Have you assessed your records for compliance? Pension Scheme Required? Employer Contribution Employer Optional Contribution Tier 3 Gross pay 3 Options available to Employers Employer to install a Qualifying Workplace Pension Scheme Consider Postponement and decide on Deferment Date Change Payroll Fully Compliant and inform all employees Evaluate Run Payroll No Change Automatically Enrol all employees on your Staging Date Change Evaluate Pension Provider to send file of Opt-Out Re-Run Payroll No Change Evaluate Send to Pension Provider File Payroll Send to HMRC Have you Registered the scheme with the TPR? Yes

22 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

23 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

24 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.

25 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.

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29 How are we doing? 1. How many employers have auto enrolled since 2012? 2. How many will auto enrol Jan to Mar 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

30 You 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

31 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 1 st day of following month a local council has an ongoing duty to assess all staff each time an employee is paid

32 You must. Keep records Your 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.

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

34 A QWPS could be A Stakeholder Pension An Occupational Pension Trust A Master Trust, multiple employers A Group of Personal Pension Plans National Employment Savings Trust(NEST)

35 Watch out for. Deductions Net or Gross from Net or Gross Pay Maternity Pay contributions may differ from GPP* to Occupational Schemes NEST differs from other Master Trusts Contribution Refunds for short service may be withdrawn in future legislation *GPP = Group Personal Pension

36 You must not. Encourage staff to Opt-Out Offer any inducements to Opt-Out Offer jobs to people who agree to Opt-Out Try to make employees Self Employed Pay less than the stipulated minimum Ignore Auto Enrolment X X X X X X

37 Enrol My Staff IFA Accountant Direct Insurer Master Trust Nest Payroll Bureau Pre-Staging Consultancy P P O O O O O Pension Scheme Advice Personal Pensions Plan P P O O O O O Master Trust P P 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 Pay-roll P O O O O P P Pension P P O P P O O What we do differently to many other advisors.

38 What next? If you don t know your Staging Date; Send your PAYE 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 My Staff for advice

39 Thank you, do you have any questions? Enrol My Staff is a trading style of The Enrolment Professionals Limited Fareham, Hampshire, PO14 3RP t: e: info@enrolmystaff.co.uk w: