The Moore Stephens Pensions Master Trust Employer Guide

Transcription

1 The Moore Stephens Pensions Master Trust Employer Guide Wealth Management PRECISE. PROVEN. PERFORMANCE.

2 2 Contents What you need to know about Auto Enrolment...3 Questions and Answers...3 What is automatic enrolment?....3 What is a staging date and when does this apply?....3 Why choose the Moore Stephens Pensions Master Trust?... 4 Who should I enrol in the Scheme?....5 What do I need to do?...6 How much do I need to contribute?...7 What is the Moore Stephens Pensions Master Trust?....9 How does automatic enrolment work?... 9 The automatic enrolment process...9 What communications need to be issued? What if an employee wants to opt out? What if an employee wants to opt in? What happens if I don t have a qualifying scheme? What happens if I don t comply? Employment Issues...11 Declaration of Compliance...11 Ensuring you stay compliant...12 Keeping payment information and records...12 The Legalities...12 Law Compensation Trustees Financial Conduct Authority register...12 Auto Enrolment pensions for Employers...13

3 3 What you need to know about Auto Enrolment In the UK, we are now enjoying longer, healthier and more active lives than ever before. This is great news but are we saving enough for our retirement. The State Pension was introduced back in 1909 when the average life expectancy was around 45 years old. With the average age now increasing by a further 30 years, we are spending longer in retirement than ever before. In order to promote a savings culture in the UK, the Government introduced new legislation under the Pensions Act 2008, requiring all employers to enrol all eligible workers into a compliant pension scheme. This is otherwise known as the Workplace Pension Reform or automatic enrolment. At Moore Stephens we know this may sound daunting, so we have put together a simple solution to help meet your auto enrolment employer duties and take care of the compliance requirements needed to ensure your pension arrangement is a Qualifying Workplace Pension Scheme (QWPS). Questions and Answers What is automatic enrolment? On the 1 October 2012, laws contained in the Pensions Act 2008 came in to force. To put it more simply, all employers must meet the legal requirements for auto enrolment which are: 1. To provide all of your workers with access to a qualifying workplace pension scheme (QWPS) 2. To automatically enrol eligible workers into a qualifying workplace pension scheme (QWPS) 3. To pay a minimum level of contributions It is possible that an existing pension arrangement may already meet these needs, however you will need to speak with your Provider to ensure they meet all the new requirements and therefore compliant. What is a staging date and when does this apply? Each employer is given a staging date on which each of the new duties will first apply. You should by now be in receipt of a letter from the Government stating your staging date. If you have not received this then your staging date can be determined by entering your PAYE reference into the tool on the Pensions Regulator Website:

4 4 Why choose the Moore Stephens Pensions Master Trust? Over 1.8 million employers are due to meet their staging dates from 2016 to % of small and medium sized businesses do not have any existing pension arrangements for their staff at all * and therefore capacity to take on new pension schemes will be an issue for the pensions industry. Auto-enrolment: staging volumes by quarter Staging volumes by quarter 250 Number of employer PAYE schemes (000s) Q1 2014/15 Q2 2014/15 Q3 2014/15 Q4 2014/15 Q1 2015/16 Q2 2015/16 Q3 2015/16 Q4 2015/16 Q1 2016/17 Q2 2016/17 Q3 2016/17 Q4 2016/17 Q1 2017/18 Q2 2017/18 Q3 2017/18 Q4 2017/18 Medium employers, people Small and micro employers, Fewer than 50 people New employers Source: Pensions Regulator As you can imagine, with significant capacity issues, larger pension providers will become selective about which schemes they are prepared to take on. The choice of providers becomes even more limited when you have less than 5 employees. The Moore Stephens Auto Enrolment Solution has been established to help employers provide a simple, quality, qualifying workplace pensions scheme (QWPS) that meets all the requirements for auto enrolment, whilst at the same time providing flexibility and choice for their employees. * Survey conducted by the NOW Pensions.

5 5 Key Benefits of the Moore Stephens Pensions Master Trust The Moore Stephens Auto Enrolment Solution has been designed by our specialist employee benefits and payroll team, providing a cost effective solution for all employers with guaranteed acceptance into the Moore Stephens Pensions Master Trust. The key principles to our solution Advantages Establish an auto enrolment solution now and postpone contributions until your actual staging date Future proofing compliance with the legislation without the need to contribute until actually required Our solution accepts payroll data in any format Removing problems of data capture A fully Governed Default Investment Fund Ensuring default funds are appropriate for employees who haven t actively chosen them We assess the workforce, communicate and deal with any opt outs We are the provider of the Qualifying Workplace Pension Scheme Reducing the majority of Employer responsibility Dedicated consultant to take you through the journey Who should I enrol in the Scheme? Your workforce can be divided in to three categories; eligible jobholder, non-eligible jobholder and entitled worker, with different duties applying to each category. You will need to assess all your workers to see if they are eligible and you may not need to automatically enrol all of them. Age 22 to State Pension age Below 22 or over State Pension age Eligible jobholder Earns over 10,000 a year Must be automatically enrolled Entitled to employer contributions Non-eligible jobholder Earns over 5,876 a year Can ask to be enrolled Entitled to employer contributions Non-eligible jobholder Earns over 5,876 and up to 10,000 a year Can ask to be enrolled Entitled to employer contributions Entitled worker Earns up to 5,876 a year Can ask to be enrolled Not entitled to employer contributions Entitled worker Earns up to 5,876 a year Can ask to be enrolled Not entitled to employer contributions This is based on the 2017/18 auto enrolment and qualifying earnings levels. These figures are reviewed annually by the government and may change each year. Source: National Employment Savings Trust set up by the Government

6 6 What do I need to do? Annual earnings ( ) 5,876 or below Over 5,876 to 10,000 Age to state pension age State pension age to 74 Entitled Worker An employee may ask to opt in but you are not obliged to contribute to their pension Non Eligible Jobholder An employee may ask to opt in and you will have to contribute to their pension. Over 10,000 Non Eligible Jobholder An employee may ask to opt in and you will have to contribute to their pension Eligible Jobholder You will need to automatically enroll and you will need to contribute to their pension Entitled Worker An employee may ask to opt in and you do not have to contribute to their pension Earnings The Pensions Act 2008 contains its own definition of earnings which includes not only worker s basic salary or wages, but also other amounts such as commission, bonuses and overtime. The legal test for determining a worker s annual earnings can be complex, especially where workers are paid on an hourly, weekly or monthly basis and their earnings fluctuate. You will need to decide what you are going to base your contributions on as there are four different ways of assessing salary. This will determine how much your employees and you as the employer will have to pay in to the scheme. You will need to work out which method is most appropriate for you. 1. Qualifying Earnings (Banded Earnings) is a band of gross annual earnings that can be used to work out what contributions a worker should get. It includes a worker s salary, wages, overtime, bonuses and commission, as well as statutory sick, maternity, paternity or adoption pay. For the 2017/18 tax year it s anything over 5,876 and up to 45,000. Earnings between these two amounts are eligible for the minimum percentage contributions as stipulated by auto enrolment legislation. Earnings outside of this band are therefore not eligible for contributions which means the first 5,876 is not counted and neither are any earnings above the 45,000 threshold. The figures are reviewed every year by the government and usually change. Expenses such as food, travel or car allowance are not considered to form part of an employee s qualifying earnings. The assessment of whether a component of pay constitutes an element of qualifying earnings is the responsibility of the employer. For any earnings above the qualified earnings threshold of 45,000 the employer is under no obligation to contribute to the employee s pension fund.

7 7 2. Pensionable Earnings (Unbanded Earnings);disregards the lower and upper earnings threshold. s are based on an employee s earnings from the first 1. Employers can choose which basis to use when calculating contributions as follows: a) Basic salary; contributions will be based on pensionable earnings which must be equal to basic salary only, therefore this does not include bonuses, overtime or commissions. b) Pensionable Earnings; contributions are based on pensionable earnings which must be at least equal to 85% of the employee s total PAYE earnings. c) P60 Earnings; contributions are based on employee s total pay. The following table shows the minimum contributions for each option from April All of these percentages will be phased in from your staging date and will increase on 6 April 2018 and again on 6 April Basis Banded earnings Between 5,876 and 45,000 Pensionable earnings Based on earnings from 1 Min. conts 8% 9% 8% 7% Min. Employer conts 3% 4% 3% 3% Employee conts Up to 5% Up to 5% Up to 5% Up to 4% Definition of earnings Certification required n/a Based on basic salary Pensionable earnings must be at least 85% of total No Yes P60 earnings How much do I need to contribute? A qualifying scheme is a registered pension scheme which meets certain requirements. The minimum contributions that you must pay into your employee s pension scheme are shown in the following tables. They are currently a total minimum contribution of 2% with at least 1% employer contribution. Minimum contributions are being introduced gradually over time as detailed above. You will usually pay pension scheme contributions either as a fixed amount or based on a percentage of earnings. an employer may self-certify their own money purchase scheme as a qualifying scheme and will be able to certify compliance with the requirements it if provides contributions on any of the Pensionable Earnings basis.

8 8 Based on Qualifying Earnings: Banded Earnings between 5,876 and 45,000 Dates Employer's staging date to 05/04/18 06/04/18 to 05/04/19 Minimum Employer Minimum Employee (including tax relief) Total 1% 1% 2% 2% 3% 5% 06/04/19 onwards 3% 5% 8% Based on Pensionable Earnings: SET 1 Dates Minimum Employer Minimum Employee (including tax relief) Total Pensionable Earnings Basic Salary (must be at least equal to basic pay) Employer's staging date to 05/04/18 06/04/18 to 05/04/19 2% 1% 3% 3% 3% 6% 06/04/19 onwards 4% 5% 9% SET 2 Dates Minimum Employer Minimum Employee (including tax relief) Total Pensionable Earnings must be at least 85% of total earnings Employer's staging date to 05/04/18 06/04/18 to 05/04/19 1% 1% 2% 2% 3% 5% 06/04/19 onwards 3% 5% 8% SET 3 Dates Minimum Employer Minimum Employee (including tax relief) Total Pensionable Earnings P60 Earnings (must be equal to total pay) Employer's staging date to 05/04/18 06/04/18 to 05/04/19 1% 1% 2% 2% 3% 5% 06/04/19 onwards 3% 4% 7% The proposed dates are subject to Parliament approval.

9 9 What is the Moore Stephens Pensions Master Trust? The Moore Stephens Pensions Master Trust offers a complete auto enrolment solution from planning, implementation, communications and ongoing worker assessments. It is a fully compliant workplace pension scheme to help your employees save for retirement. The scheme is set up under our Master Trust which is administered by Corpad, appointed by the Scheme Trustees. A Master Trust is a multi-employer occupational scheme where each employer has its own division within the master arrangement. There is one legal trust and therefore one trustee board. The Trustee retains decision making independence for each division on things such as investment and service providers under a trust wide governance structure. Master Trusts offer employers the benefit of a governance function but with generally low operating costs and greater simplicity and expediency than a single employer scheme. Whether an employer choses to use an existing pension or our Auto Enrolment Solution they will have to self-certify that their scheme and the contribution basis meets the required standard under the Pension Act We can help with this process. How does automatic enrolment work? Once your business reaches its Staging Date you must begin enrolling all eligible jobholders into an automatic enrolment scheme. As the employer, you will have one month, beginning on the date on which the employee first satisfies the criteria (known as the employee s enrolment date) to comply with this obligation. You will not need to automatically enrol any eligible jobholders who are already part of a qualifying workplace pension scheme. Example A James is aged 32 and earns 19,000 per year. He is not a member of the existing pension scheme at work. James s employer will be required to enrol him into an automatic enrolment scheme within one month of their staging date, because James s age falls between 22 and state pension age and he earns more than 10,000 per year. Example B Janet is aged 21 and earns 15,500 per year. She is not a member of the existing pension scheme at work. Janet s employer will not need to enrol her into an automatic enrolment scheme as Janet is not yet 22. However, when Janet is 22, she will need to be automatically enrolled within one month. The automatic enrolment process As the employer, you will have to provide certain information to the Jobholder and the automatic enrolment scheme. This data comprises enrolment information and Jobholder information and must be provided within one month of the Jobholders automatic enrolment date. We can help with template data reports and assist with the process of uploading, until you are confident with what you need to do.

10 10 What communications need to be issued? All employers have a legal duty to write to their workforce about their new pension rights. There are complicated rules about what to send which workers. Once your employee data is sent to the administrators of the Moore Stephens Pensions Master Trust scheme, your workforce will be assessed and the statutory communications will be issued. Another less thing for you to worry about. What if an employee wants to opt out? Jobholders who are members of a personal pension scheme, the opt-out period starts from the latter of when the Jobholder is sent the terms and conditions of the agreement to become an active member, or provided with written enrolment information. Jobholders who are members of an occupational scheme usually have one month to opt-out, from the latter of the day on which they become a member of an automatic enrolment scheme, and the day on which they receive information about the automatic enrolment scheme. Provided that the jobholder follows the opt out process set out in the Pensions Act 2008, they will be treated as though they had never been a member of the automatic enrolment scheme and will be entitled to a refund of any pension contributions which have been deducted from their earnings. As the employer, you will be required to carry out automatic re-enrolment processes on every third anniversary of your Staging Date and may choose a date up to three months either side of the anniversary date, which may allow you to streamline some of your administrative processes. The automatic re-enrolment process will require you to automatically re-enrol any Jobholders who are eligible for automatic enrolment, and who have previously opted-out or ceased to become members of a qualifying scheme (unless they have done so in the 12 months prior to the automatic re-enrolment date). Jobholders will have the right to opt-out again upon re-enrolment. What if an employee wants to opt in? Non-eligible jobholders have a right to opt in and if they choose to do so, must be enrolled in an automatic enrolment scheme into which you, as the employer, must make contributions. Entitled workers have a right to join and if they choose to do so, must be enrolled in a pension scheme. However, you are under no statutory duty to make any contributions into that pension scheme. In order that workers are aware that they have the right to opt-in, or join, an employer will have to provide information notifying them of this right, within six months of the worker satisfying the criteria set out above. What happens if I don t have a qualifying scheme? Where an employer does not have a qualifying scheme, or has eligible jobholders who are not members of a qualifying scheme, they will have to make arrangements for them to be enrolled into an automatic enrolment scheme.

11 11 An automatic enrolment scheme must: Be able to automatically enrol eligible jobholders with no barrier to entry; There must be nothing which requires the member to make any active decision (e.g. an investment decision). The Moore Stephens Pensions Master Trust is a qualifying scheme. What happens if I don t comply? The Pensions Regulator will be responsible for ensuring compliance with the new rules, and has several powers at their disposal, including: a compliance notice, which the Pensions Regulator can issue directing an employer to comply with their regulations under the Pensions Act 2008; a third-party compliance notice, which the Pensions Regulator can issue directing a third party to take action so that an employer can comply with their obligations under the Pensions Act 2008; an unpaid compliance notice, which the Pensions Regulator can issue if an employer has failed to make the correct employer contributions required under the Pensions Act 2008; a fixed penalty notice, being a fine for a fixed amount of 400, which the Pensions Regulator can issue in respect of an employer s failure to comply with their obligations under the Pensions Act 2008; an escalating penalty notice, being a fine for an amount which increases on a daily basis until such time as compliance is achieved, which the Pensions Regulator can issue in respect of an employer s failure to comply with their obligation under the Pensions Act Employment Issues The Pensions Act 2008 also prevents an employer from engaging in certain practices intended to discourage a worker from becoming a member of a pension scheme. In particular: An employer must not do anything during the recruitment process to indicate that they will choose a candidate based upon the fact that the candidate would opt-out of a scheme if automatically enrolled; An employer must not do anything which would induce a Jobholder to opt-out of a pension scheme; An employer must not subject a worker to detrimental treatment on the basis that the employee has sought to enforce rights under the Pensions Act Declaration of Compliance Once you have your qualifying workplace pension scheme set up, and after you have enrolled the employees who are eligible to be enrolled, you must tell The Pensions Regulator that you are fully compliant. You have five months from your staging date to complete the declaration of compliance. To do so, you must ensure you have all the information required to hand. You can find a checklist on the Pensions Regulators website by following the link: You will then need to complete this online at: An employer s declaration is a legal duty. If it is not completed within five months of your staging date then you could be fined, but you are able to authorise Moore Stephens to do this on your behalf.

12 12 Ensuring you stay compliant You need to pay your contributions to your staff pension scheme on time. This includes calculating and deducting contributions from your staff s salaries. The law requires that when you deduct contributions from your staff s pay you must pay these to your staff pension scheme no later than the 22nd day (19th if you pay by cheque) of the next month. There are special rules for the first deduction of contributions on automatic enrolment under the Pensions Act You risk being fined by the regulator if you don t pay on time. You may agree an earlier date to pay your employer contributions with your trustees or administrators. However, it s easier if you pay your contributions on the same day as your staff contributions. Keeping payment information and records Incorrect or out-of-date information is the main cause of payment failure and disputes between an employer and their scheme provider or trustees. You must keep information and records about what contributions you pay to your pension scheme for six years (in most cases). This will help you ensure the correct contributions are paid and provide evidence if there s a dispute. Under the Moore Stephens Pensions Master Trust, this information is all held with the administrators so you can be assured this is in safe hands if ever needed. The Legalities Law The Moore Stephens Pensions Master Trust is subject to English Law Compensation The investments may be covered by the Financial Services Compensation Scheme This may not apply to investments managed by external managers. Aegon funds are included. Insurance business of this type is generally covered for 90% of the value of the whole claim, without limit. Trustees Stephen Nicholas Humphreys; PS Independent Trustees Limited and Tim Harries Financial Conduct Authority register Moore Stephens is a trading name of Moore Stephens LLP, which is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is Registered office; 150 Aldersgate Street, London, EC1A 4AB. Registered in England & Wales No. OC

13 13 Auto Enrolment pensions for Employers This guide is designed to assist Businesses in complying with their duties. This guide is not intended to be a definitive way of complying with the duties of the Pensions Act 2008 and regulations made under the Act. Moore Stephens cannot provide a definitive interpretation of the law; only the courts can do this. If you have any doubts of your legal rights or obligations please seek legal advice. We believe the information contained herein to be correct at the time of going to press, but we cannot accept any responsibility for any loss occasioned to any person as a result of action or refraining from action as a result of any item herein. Printed and published by Moore Stephens LLP, a member firm of Moore Stephens International Limited, a worldwide network of independent firms. Moore Stephens LLP is registered to carry on audit work in the UK and Ireland by the Institute of Chartered Accountants in England and Wales. Authorised and regulated by the Financial Conduct Authority for investment business. DPS31334 September 2017