Pension Information for Staff. Automatic Enrolment

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1 Pension Information for Staff Automatic Enrolment Frequently Asked Questions 1. What is Automatic-Enrolment? Automatic Enrolment is a new pension scheme introduced by the Government to encourage employees to save more for their retirement, this is a legal requirement for all UK Employers. 2. When did Automatic Enrolment Commence? Automatic Enrolment began on 1 st October On what date do the Southern Health and Social Care Trust have to apply the legislative changes? Each employer is given a date from which the changes have to take place. This is known as the staging date. The employers with the largest number of workers will have the earliest staging date. The Southern Health and Social Care Trust s staging gate is 1 st March It is permitted under the legislation for employers to apply (if they so wish) for a postponement and the Trust will be applying for a postponement until 1 st May P a g e

2 4. What effect will postponement have on Auto Enrolment? The Trust intends to use postponement on their staging date of 1 st March The Trust will continue in accordance with current pension provisions to enrol all new employees into the scheme as and from 1 st March In addition and prior to the staging date all non superannuable staff will be assessed for automatic enrolment into the HSC pension scheme. 5. Is an employer required to auto enrol all employees within the workforce into a qualifying pension scheme? No. In order for an employee to be eligible for Automatic Enrolment he/she must satisfy certain requirements by reference to age and qualifying earnings. An Employee must be: Aged 22 or over and below State Pension Age; Working or ordinarily working in the U.K; and Earn above the earnings threshold (Currently 9,440 pa in the 2013/14 year) The Trust may also apply a deferment of automatic enrolment for existing staff who are not in the pension scheme. If this is applied, existing staff, not in the pension scheme, will be notified of the deferment and this will mean you will not be automatically enrolled until September It is important to note that at any point, existing staff who are not in the pension scheme, are able to request to join the scheme at any time. 6. If I am automatically enrolled into a workplace pension scheme, what scheme will I be joining? 2 P a g e

3 As an employee of the Southern Health and Social Care Trust you will be joining the Health and Social Care (HSC) Pension Scheme. 7. What type of scheme is the HSC Pension Scheme? The HSC is a defined benefit workplace pension scheme which means that the amount of pension you get at retirement is based on various factors such as age, earnings and how long you have contributed into the pension scheme. 8. What are the benefits of the HSC Pension Scheme? A full list of the Pension Scheme benefits is available separately on the Trust s Intranet Site or can be accessed by visiting the Pension Administrators website 9. How much will I pay by way of contributions into the NHS Pension Scheme? Contributions are deducted on a % basis of what an employee earns, these are as follows: Current Contributions Deducted Tier Pensionable Pay in 2011/12 Contribution Rate in 2012/13 1 Up to 15, % 2 15, to 21, % 3 21, to 26, % 4 26, to 48, % 5 48,983 to 69, % 6 69, to 110, % 7 110, and over 10.9% Please note that the Trust as your NHS employer pays a Superannuation contribution rate of 13.3%. 3 P a g e

4 10. What happens if I don t fall into the requirements for Auto Enrolment? Employees who are not eligible for automatic enrolment will fall into two categories: i. Non-Eligible Jobholders These staff can choose to join a qualifying pension scheme if they wish to do so and the employer must arrange for pension scheme membership and make the necessary deductions from pay. The scheme which members will join will be the HSC pension scheme. ii. Entitled Workers These staff can choose to join the HSC Pension Scheme if they wish. 11. What considerations do I need to take when deciding to join a pension scheme? You may want to start thinking about the things you will need money for in retirement such as, paying bills, transport and buying food. Also the other things you may want to do such as; Run a Car Buy Gifts for your family/friends Go on days out/holidays Do sport or Other Leisure Activities You should also bear in mind that at present the FULL basic state pension in 2012/13 is a week for a Single Person and for a married couple who have the maximum number of contributing years. The number of qualifying years you need for a full basic State Pension depends on your age and whether you are a man or a woman. Men born before 6 April 1945 usually need 44 qualifying years. 4 P a g e

5 Women born before 6 April 1950 usually need 39 qualifying years. Men born on or after 6 April 1945 need 30 qualifying years. Women born on or after 6 April 1950 need 30 qualifying years. For further information please refer to Am I considered as an employee if I work irregular hours? Employees with irregular working hours (these could include casual, bank and individuals with zero hours contracts) will need to be considered as workers if most or all of the following apply. You had to sign standard terms and conditions of employment contract. You occasionally undertake work for the employer. You are expected to perform the work yourself and not by substitution of another. The employer is under No obligation to offer work to the Individual and the individual does Not have to accept work if offered. If the work is offered the individual s contract with the employer describes the relationship as casual, freelance, as and when required, zero hours or similar. While at work if you are under the supervision or control of management The employer deducts tax and national insurance from your wage/salary. 13. What happens if an employee doesn t qualify for automatic enrolment week by week but does have exceptionally high earnings in one week/month (e.g. from overtime, pay arrears etc. An employee in the above situation will be classified as an accidental job holder and will only be considered as eligible and therefore qualify for automatic enrolment 5 P a g e

6 if their total earnings in the 12 month pay reference period would mean that the earnings became qualifying earnings. The employee must then be automatically enrolled provided they are between age 22 and State Pension Age and earn more than the basic income tax threshold. 14. If an employee has two employments with the Trust, neither of which qualifies for automatic enrolment based on the earnings in each post, but collectively their earnings come within the threshold, what will the Trust do? The regulations advise that if the employer decides that the two posts are tantamount to a singular employment relationship then the hours worked in each post will be accumulated for automatic enrolment purposes and the employer will assess the worker based on the total earnings for both posts. 15. If an employee has three part-time employments, one post 20 hours per week with a second post of 17.5 hours per week and a third post of 10 hours, total 47.5 worked per week, how will automatic enrolment be applied? The Trust will auto enrol the employee into the HSC Pension Scheme for hours up to the full time hours of 37.5 per week only. 16. What happens if I am not eligible to join the HSC pension scheme? There will be some employees who will not be eligible to join the HSC pension scheme but will require to be automatically enrolled into a scheme. These include employees who are already in receipt of HSC pension s benefits or work with another HSC employer and pay maximum contributions with that employer up to 37.5 hours per week. 6 P a g e

7 These individuals will be offer an alternative pension scheme which will be a NEST Saving Scheme. 17. What is a NEST Saving Scheme? NEST (National Employment Savings Trust) is a defined contribution occupational pension scheme which has been developed as a low cost workplace pension scheme. The scheme has been established by statute and is able to accept contributions from multiple employers. 18. What are qualifying earnings for automatic enrolment purposes? This is a range of earnings in a relevant pay period that are eligible for national insurance contributions. For the current tax year ( ) it is 5,668-41,450. The lower earnings threshold is currently 5,668. The automatic enrolment trigger is 9,440, these figures will be updated annually for the new tax year. 19. What happens to my pension if I die before retiring? The HSC Pension Scheme provides lump sum and or pension benefits to your nominated dependants in the event of your death. The benefits payable will depend on your circumstances at the time of your death. You will be able to nominate a recipient of your benefits in the event of your death. You can change your nomination at any time during your employment. It is important to review your nominated dependants if you re circumstances change. 20. Does an employer need to obtain an employee s consent for them to join a qualifying automatic enrolment pension scheme? No. A key feature of the automatic enrolment provisions is that eligible job holders must be automatically enrolled into a qualifying scheme. Automatic enrolment is 7 P a g e

8 compulsory however job holders may choose to opt out of the scheme once they have been enrolled. 21. If I fall into the category where the employer is required to automatically enrol me, how do I apply to opt out of the HSC Scheme if I do not wish to continue paying superannuation contributions? To opt out of the pension scheme you will be required to complete an opt out form SD502 which can be obtained from HSC Pension Service by logging onto the website telephoning the Superannuation Branch on (028) OR writing to the HSC Pension Service, Waterside House, 75 Duke Street, Londonderry, BT47 6FP 22. What happens if I miss the one-month deadline to opt-out of the pension s automatic enrolment scheme? The Pensions Act 2008 provides only that a refund of employee contributions must be given if the employee asks to opt out within one-month of receiving the valid optout notice, or if the payroll arrangements closed before the notice is received, by the last day of the second applicable pay reference period following the date on which the valid opt-out notice was received. This means that the Trust will pay the refund in the next available payroll run. Example - You are paid on the 3 rd last day of each month and the pay reference period is a calendar month. The closedown date for payroll arrangements is e.g. 20 th May. A valid opt out notice is received on the 25 th May, therefore this is too late for a refund of contributions in that pay reference period. The Trust has until the 3 rd last day of the following month i.e. June to refund the contributions. 8 P a g e

9 23. If I miss the deadline as outlined above can I have the contributions which I have paid into the scheme refunded to me from the HSC Pension Service? Yes. A refund can be claimed provided you have paid contributions for less than 2 years. It may take some time for the Superannuation Branch to refund contributions, whereas if you wish to opt out and do so within the one month deadline as described above, you will receive a refund in your next pay. 24. How will the Trust deal with new appointees under the auto enrolment scheme? Assuming that a new recruit meets the criteria to be an eligible job holder and the employer has passed its automatic enrolment staging date, the employer is required to enrol him/her automatically into the HSC Pension Scheme on commencement of employment. 25. What is re-enrolment under the auto enrolment pension provider? Employers are required to re-enrol eligible job holders who previously opted out of the automatic enrolment pension scheme every three years. A job holder can choose to opt out of the scheme again if they wish to do so. (Please see Q&A 21 with regard to opting out arrangements) 26. What information must my employer provide to employees about pensions automatic enrolment? One of the employers duties under the pension automatic enrolment provisions is to provide certain information to workers. This information must include details to eligible job holders who are being automatically enrolled, what automatic enrolment means for them, their right to opt out and back in again. Information should also be provided to employees as to where they can find out further information about pensions and savings for retirement. 9 P a g e