The NOW: Pensions newsletter for our community of participating employers. SIMPLY CLICK THE DOTS BELOW TO START READING THROUGH OUR LATEST EDITION!

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1 Dot todot ISSUE 01 The NOW: Pensions newsletter for our community of participating employers. SIMPLY CLICK THE DOTS BELOW TO START READING THROUGH OUR LATEST EDITION! Auto enrolment s help to get it right Salary sacrifice managing refunds Christmas operating

2 One year of auto enrolment achievements and challenges Just over twelve months after the very first companies started automatically enrolling employees into pensions, the project to get the nation saving has earned a positive first year report. Solid progress thanks to lots of hard work would probably sum up this initial phase in the vast auto enrolment project. With considerably more than a million more people now saving for their retirement than a year ago, and opt-out rates far lower than most had predicted, there is much to applaud. At the end of September, NOW: Pensions announced that it had: Over 400 participating employers Nearly 125,000 members Opt-out rates across all employers reassuringly low at just 6.9%. Where the benefits of pensions have been clearly communicated to staff we have even seen employees joining schemes in situations where they are not required to be automatically enrolled, such as part-timers or full-time workers under 22 years of age or over state pension age. But, this early success is no reason for anyone in the delivery of pensions to rest on their laurels. NEXT

3 Looking ahead Opt-out rates As the economic climate remains challenging and minimum employee contributions will typically increase to 3% in 2017 and then 5% in 2018, some workers will undoubtedly feel the squeeze and consider their options and personal priorities. Clearly communicating the benefits of remaining in the scheme will be imperative. s conundrum There is a fine line between ensuring people remain opted-in and encouraging them to increase their contribution levels. Auto enrolment will go a long way to helping people get into the savings habit, but contributing the minimum will not, in reality, give members enough to live comfortably in retirement. Employers play a key role here in effectively and collectively communicating this message. Trust doesn t cost a thing The lack of trust and confidence in the financial services industry is another potential barrier to the success of auto enrolment. Scheme members need to be constantly reassured that their pension is delivering on its promises. Continued collaboration The industry, government and regulators all need to continue to work together to safeguard the long-term success of auto enrolment by focusing on improving standards and keeping charges fair and reasonable. BACK

4 getting it right first time and every time To keep auto enrolment on track, smooth data interchange is critical to prevent delays and ensure that important communications are delivered within legislative deadlines. By closely following the steps outlined below, you will help the processes to run more smoothly and ensure that our services can be delivered with fewer queries. If you are unsure about any of these points please contact us at and we will arrange for one of our team to get in touch to help you out. We are committed to working with you to help you provide timely and accurate data to avoid the risk of any breaches of the regulations.

5 1 File production tips The data specifications and business as usual processes as set out and tested at the outset form the basis of the following instructions: General points: 3 The file format must be in line with the interface specification supplied e.g. csv 3 The file name must also be in line with the specification e.g. for Interface 4 this should be in the format XXXX_ZZZZ_ Contributions.YYYYMMDD.txt where XXXX=4 digit scheme code and ZZZZ the 4 digit paypoint code 3 Any file should not have a 5%+ validation error rate 3 Files must be submitted via the agreed methodology as set out by NOW: Pensions during testing e.g. SFTP 2 Contributions tips 3 The contribution files must NOT contain negatives 3 Funds must be received at the latest within three bank working days following the 19th day of the month after the contribution file receipt or payroll period and may be submitted at any time ahead of this 3 Funds must not be submitted without a corresponding contributions file 3 There must be one fund deposit per file, that is, do not make a single payment covering several files 3 Fund deposits must exactly match the sum of the contribution records submitted within the contribution file 3 All payments must be made by BACS or CHAPS to: NOW: Pensions Trust at Sort Code Account Number Please ensure there is a payment narrative that starts with your 4-digit scheme code, your 4 digit paypoint code and also the pay date as YYMMDD date. This reference is essential to allow your contributions and payment to be matched and reconciled Any files or funds that do not adhere to these instructions may not be processed and the following remediation and escalation process will apply. BACK/NEXT

6 STEP 1 If files are not able to be processed: You will receive an informing you of this and the reason why Please respond to the confirming when a corrected file/fund will be made available When we receive the corrected file / fund, you will be back on track and no further action will be needed STEP 2 We will contact you if the revised file / fund is not received within three working days. STEP 3 If the corrected file / funds are not submitted within a further five working days, we will arrange for one of our operational team to discuss the issue and help you move forward. STEP 4 If the outstanding query is not resolved within a further two days, then: Any funds received will be returned if the issue is related to the contributions Any files received by NOW: Pensions will be archived for audit trail purposes but will be removed from all work schedules All lifestyling processes will be stopped We are obliged by law to report the issue to the Pensions Regulator if the failure to provide the corrected information could result in a regulatory breach. If this is necessary, we will look to inform you first STEP 5 If the same error is repeated in the following payroll period, the above process will be repeated and we will contact you to discuss the matter. STEP 6 It is a condition of participation within the NOW: Pensions master trust that data and monies are supplied in an accurate and timely manner. In the extreme circumstances of being unable to resolve submission errors, we may have no choice other than to regard this as a contractual breach. We don t want to sound draconian but I m sure you appreciate that it s essential that data and contributions are sent to us in line with the agreed processes so that we can provide you with a service that complies with the regulations. We will fully support you to assist with this. BACK

7 the impact on refunds Some employers are using salary sacrifice as a way of reducing both the employer and employee national insurance contribution. This works by the employee effectively giving up part of their salary. The employer then pays that amount into the pension plan. However, this does mean that as there are no employee contributions there is no right to a refund if the employee would otherwise be entitled to one. This does not impact on the rights of the employee to be refunded if they leave the scheme within the one month opt-out window. It is worth noting that under proposed legislation due to come into effect in 2014, the right to a refund will be removed. Salary sacrifice is regulated by HM Revenue and Customs. You can find more information and guides on their website: sacrifice.htm The guides go into more detail about the effects of salary sacrifice on state benefits such as maternity pay, the minimum wage and tax credits. REFUND

8 Build-up of communications and In common with many other providers, as we work through the complexities of auto enrolment and get our IT systems and processes running smoothly, we have experienced occasional delays in. This has been due to data anomalies, the need to carry out additional testing and high levels of activity close to staging dates. This has resulted in some employees receiving their auto enrolment communications later than they should have and leavers being processed outside of our standard service level. All communication build-ups have now been cleared and all employees who should have received their communications are now in receipt of them. The backlog of leavers are being worked through and we expect to be up to date by Christmas. As employers, no action is required from you and please be assured that no employees and/or scheme members will be disadvantaged by these delays. We continue to closely monitor and tune our systems and processes to ensure optimum performance. We also keep in regular contact with The Pensions Regulator and to date they have been comfortable with the approach we have taken to dealing with exceptional issues.

9 The dangers of re-using payroll A problem which we ve witnessed a number of times is where payrolls re-use the same payroll ID if a former worker re-joins the company. This then comes across to us as a new joiner record but is rejected when we try to load it as our systems expect a unique payroll number for each new joiner. This topic is covered in the HMRC document Guidance on RTI Data Items from April 2013 which states that if the employee has two or more employments under the same PAYE scheme, you must use a different payroll ID for each employment under the scheme. Specifically it states do not reuse the same payroll ID for an employee you have re-employed in the same tax year.! PAYROLL NUMBERS Whilst we are looking at possible workarounds for this please could we request that you follow the HMRC guidance. This will ensure smoother and avoid the potential issue of us being unable to produce the regulatory communications and accept contributions for re-joiners. NEXT

10 Trust Deed and Rules We have made some minor amendments to the Trust Deed and Rules and the updated version can be found opposite. The revisions reflect feedback we have received from participating employers and are designed to improve clarity around certain points. The Trust Deed will continue to be updated from time to time and we will always circulate updated versions. DOWNLOAD Click the graphic opposite to download your sample copy of the amended Trust Deed and Rules. BACK

11 Christmas opening How to contact us Our administration and call centre offices will be closed on: 25 th Christmas Day 26 th Boxing Day Otherwise our normal 9 5 opening times will operate. 1 st New Year s Day Employers You can contact the administration team directly at NOW: Pensions by ing nowpensions-employers@equiniti.com or calling Employees You can contact us by ing members@ or calling We recommend that if you receive any auto enrolment or pensions questions that you direct employees to us, to avoid potential risks of employers being seen to inadvertently provide financial advice. We re here for you from 9:00am to 5:00pm, Monday to Friday (excluding UK Bank Holidays).