All about automatic pension enrolment


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All about automatic pension enrolment

  1. 1. All about automatic pension enrolmentEmma King, PartnerSarah Franklin, Partner4 October 2012
  2. 2. Agenda• When, who, what?• Topical issues• Things to do 2
  3. 3. When?• Auto-enrolment introduced gradually - larger employers first; smaller employers later• „Staging date‟ determined by number of people in employer‟s PAYE payroll scheme on 1 April 2012• See• Employers can bring staging date forward 3
  4. 4. Who?1. Enrol “eligible jobholders” automatically into an automatic enrolment scheme2. Pay minimum DC contributions or provide minimum DB benefits3. Re-enrol eligible jobholders who opt-out approx every 3yrs4. Keep records5. Not induce opt-outs 4
  5. 5. Waiting period - postponement• Employers can operate waiting period of up to 3 months by giving notice (within 1 month)• May help with: – casual/seasonal workers – temporary workers – quick leavers – alignment of auto-enrolment with payroll• Jobholders‟ right to opt-in 5
  6. 6. Summary of worker categoriesEarnings Age 16-21 Age 22-SPA SPA- age 75 Non-eligible Eligible Non-eligible jobholder – jobholder – jobholder –£8,105 or may opt-in to must be auto- may opt-in tomore an automatic enrolled into an an automatic enrolment automatic enrolment scheme enrolment scheme scheme£5,564 - Non-eligible jobholder – may opt-in to an£8,105 automatic enrolment scheme Entitled worker – can request to join a pensionLess than scheme (but it does not have to be a qualifying£5,564 scheme and not entitled to employer contributions) 6
  7. 7. What?An automatic enrolment scheme:• must be a qualifying pension scheme, and• must not contain any provisions which: – prevent the employer fulfilling its auto- enrolment and re-enrolment duties, and – require a member to make a choice or provide information 7
  8. 8. Options• DB• DC• NEST (or similar) 8
  9. 9. Topical Issues • Types of worker • Contractual enrolment • Opting-out • Salary sacrifice 9
  10. 10. Types of worker• Agency workers• Casual workers/zero-hours contractors• Overseas workers• Consultants• Multiple contracts of employment• Fluctuating earnings 10
  11. 11. Contractual enrolment• Where employer enrols workers into a pension scheme pursuant to a contractual agreement• Legal duty under s3 PA2008 does not apply, so: – no statutory right to opt-out – more limited information requirements• Reduces need to treat different workers differently• May work better with enrolling everybody 11
  12. 12. Opting-out• Eligible jobholders and non-eligible jobholders who opt-in can opt-out within 1 month and receive a refund of their contributions, but: – not before they have been auto-enrolled – opt-out paperwork must come from scheme – employer must not incentivise opt-outs – employers must re-enrol every 3 years (within 6 month window)• Can leave scheme after statutory opt-out window• Beware workers with enhanced/fixed protection! 12
  13. 13. Salary sacrifice• Salary sacrifice arrangements can be continued• Care needs to be taken to ensure that it is valid and implemented consistently with the employer‟s automatic enrolment duties• HMRC has issued guidance on opting out, and has confirmed there is no longer a requirement for the arrangement to be in force for 12 months
  14. 14. Things you need to do• Check self –employed arrangements• Check agency / secondment agreements• Set up procedures to track variable earnings• Sort out approach on salary sacrifice / flex• Deal with enhanced / fixed protection workers• Allow lead times for contractual AE
  15. 15. Useful links• The Pensions Regulator‟s „Pensions reform & auto-enrolment‟ homepage -• The Pensions Regulator‟s detailed auto-enrolment guidance - guidance.aspx• The Pensions Regulator‟s „Staging date timeline‟ - timeline.aspx• The Pensions Regulator „How to bring your staging date forward‟ - staging-date-forward.aspx• Follow us on twitter @pensionlawyers and @ready2autoenrol 15
  16. 16. Any Questions?