Richard Bartlett - PPMA National Public Service Debate at the CIPD Conf - 10 Nov 2011


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  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • 28 November 2011
  • Richard Bartlett - PPMA National Public Service Debate at the CIPD Conf - 10 Nov 2011

    1. 1. Automatic enrolment and NEST Richard Bartlett – Assistant Director of Distribution Wendy Beaver – Head of Scheme Development 10 November 2011
    2. 2. 2012 reforms: what’s changing? Saving is a ‘minority sport’ Employers choose whether to contribute Active choice often needed from worker Behavioural barriers to take up Uneconomic for existing providers to supply lower earners Saving is the norm NEST is designed for our target market Automatic enrolment Do nothing = save in a pension Employers have to offer a contribution to certain jobholders Now 2012 - 2016
    3. 3. Who does what? <ul><li>Scope of automatic enrolment </li></ul><ul><li>Staging and phasing timetable </li></ul><ul><li>Compliance with employer duties </li></ul><ul><li>Regulator of workplace pension schemes, including NEST </li></ul><ul><li>A new, trust-based pension scheme </li></ul><ul><li>Public service obligation to accept all employers who want to use NEST to meet their employers duties </li></ul>
    4. 4. DWP’s staging and phasing plans Oct 2012 Apr 2014 Aug 2014 Mar 2016 Oct 2016 Oct 2017 1 per cent worker contribution 3 per cent worker Steady state 5 per cent worker Large employers Medium employers Small/micro employers New born PAYEs 1 per cent employer contribution 2 per cent employer Steady state 3 per cent employer Staging Phasing
    5. 5. The Employers’ Duties (Implementation) Regulations 2010 <ul><li>120,000 or more = 1st October 2012 </li></ul><ul><li>50,000-119,999 = 1st November 2012 </li></ul><ul><li>30,000-49,999 = 1st January 2013 </li></ul><ul><li>20,000-29,999 = 1st February 2013 </li></ul><ul><li>10,000-19,999 = 1st March 2013 </li></ul><ul><li>6,000-9,999 = 1st April 2013 </li></ul><ul><li>4,100-5,999 = 1st May 2013 </li></ul><ul><li>4,000-4,099 = 1st June 2013 </li></ul><ul><li>3,000-3,999 = 1st July 2013 </li></ul><ul><li>2,000-2,999 = 1st August 2013 </li></ul><ul><li>1,250-1,999 = 1st September 2013 </li></ul><ul><li>800-1,249 = 1st October 2013 </li></ul><ul><li>500-799 = 1st November 2013 </li></ul><ul><li>350-499 = 1st January 2014 </li></ul><ul><li>250-349 = 1st February 2014 </li></ul><ul><li>240-249 = 1st March 2014 </li></ul><ul><li>Less than 50... = 1st April 2014 </li></ul><ul><li>150-239 = 1st May 2014 </li></ul><ul><li>90-149 = 1st June 2014 </li></ul><ul><li>50-89 = 1st July 2014 </li></ul><ul><li>Less than 50... = 1st August 2014 to 1st February 2016 </li></ul><ul><li>New Employer = 1st March 2016 to 1st September 2016 </li></ul>
    6. 6. What are waiting periods? <ul><li>Proposed in the Pensions Bill 2011, in line with the Making Automatic Enrolment Work Review </li></ul><ul><li>Allows employers to defer enrolling jobholders for up to three months </li></ul><ul><li>Can apply at staging date and on an ongoing basis as workers become eligible for automatic enrolment </li></ul><ul><li>Individuals will need to be notified at their employer’s staging date (or their date of eligibility), of waiting period and have option to join earlier in the waiting period </li></ul><ul><li>Also need to consider TPR Employer Registration timescales and record keeping </li></ul><ul><li>Details set out in draft regulations. </li></ul>
    7. 7. Operating the earnings and contributions thresholds with NEST £7,475 £5,035 or less No automatic enrolment. No right to employer contribution £5,035 £5,035 £7,475 or more Automatically enrolled with employer contribution £5,036 - £7,475 No automatic enrolment. But right to opt in with employer contribution
    8. 8. Certification The Government has recently been consulting on proposed certification options : * pensionable earnings must be equal to or more than basic pay Percentage and type of pay Employer contribution 9 per cent of pensionable earnings* at least 4 per cent 8 per cent of pensionable earnings*, but the pensionable earnings of all relevant jobholders must constitute at least 85 per cent of the earnings of those jobholders at least 3 per cent 7 per cent of total pay at least 3 per cent
    9. 9. Employer duties (at the core) <ul><li>Automatic enrolment into a workplace pension scheme </li></ul><ul><li>Identification of eligible jobholders </li></ul><ul><li>Achievement of scheme membership </li></ul><ul><li>Decisions about and management of the waiting period </li></ul><ul><li>Provision of enrolment information to the jobholder, including the right to opt out </li></ul><ul><li>TPR started writing to the largest employers earlier this year. </li></ul>
    10. 10. Employer checklist <ul><li>Initial activities. </li></ul><ul><li>Identify staging date(s) </li></ul><ul><li>Consider whether to change to fit into other employer activities </li></ul><ul><li>Decide staging date </li></ul><ul><li>Arrange for a qualifying scheme to be set up if necessary </li></ul><ul><li>Notify payroll provider </li></ul><ul><li>Consider using waiting periods </li></ul><ul><li>Consider contribution basis, that is, qualifying earnings bands or certification basis and contribution levels </li></ul>
    11. 11. Employer checklist <ul><li>Initial activities </li></ul><ul><li>Identify and issue enrolment information to potential members of the scheme </li></ul><ul><li>Identify and automatically enrol jobholders and process workers opting in or issue waiting period notices to individuals </li></ul><ul><li>Collect contributions via payroll </li></ul><ul><li>Operate opt-out processes where appropriate </li></ul><ul><li>Pay employer and worker contributions across before the relevant due dates to the scheme </li></ul><ul><li>Register with TPR, providing details of qualifying schemes </li></ul>
    12. 12. Employer checklist <ul><li>Subsequent ongoing activities </li></ul><ul><li>Repeat the enrolment and opt-out process for future eligible jobholders and jobholders who opt in </li></ul><ul><li>Provide re-enrolment/registration information to TPR </li></ul><ul><li>Keep records of information issued and opt-out notices received for a minimum period </li></ul><ul><li>Carry out annual certification/minimum contributions process </li></ul><ul><li>Consider re-enrolment dates and re-enrol opt-outs as required </li></ul><ul><li>Adjust minimum contribution to reflect future phasing-in dates. </li></ul>
    13. 13. What can NEST offer?
    14. 14. The scheme proposition: complementing existing provision Focused on its target market… Designed to be easy to use Clear communication Tailored investment approach Contribution limit Restrictions on transfers Help with retirement income … with many attractive features… Open to any employer Travels with the member Low charge Online A trust based scheme run in members’ interest No burden for employers … that will work in a variety of contexts Sole scheme For a particular group of workers Entry-level scheme Base scheme
    15. 15. Looking forward to 2012 - innovative solutions - opting out <ul><li>Opting out </li></ul><ul><ul><li>Heavily prescribed, time-limited process </li></ul></ul><ul><ul><li>Review has kept it unchanged </li></ul></ul><ul><li>Employers </li></ul><ul><li>Need to engage with the process but not to run it </li></ul><ul><li>NEST will </li></ul><ul><ul><li>Run the opt-out process </li></ul></ul><ul><ul><li>Use online and other interactive media such as the telephone </li></ul></ul><ul><ul><li>Save employers costs </li></ul></ul><ul><ul><li>Take the compliance burden off employers </li></ul></ul>
    16. 16. Opt-out refund (employer and scheme) <ul><li>Refund not always required - employer can hold onto contributions during the joining and opt out windows </li></ul><ul><li>Where required, scheme refunds to employer, employer refunds worker contributions, net of tax </li></ul><ul><li>Both refund processes must happen within a month * of the date of the opt-out notice </li></ul><ul><li>* but if the payroll has just closed this can be extended </li></ul>
    17. 17. Proposition to meet all our members’ needs NEST Pre-retirement Fund NEST Lower Growth Fund NEST Sharia Fund NEST Ethical Fund NEST Higher Risk Fund
    18. 18. NEST Retirement Date Funds <ul><li>Age-based investment funds to meet members’ needs </li></ul>Your 2058 Retirement Fund Your 2039 Retirement Fund Your 2022 Retirement Fund
    19. 19. Additional fund choices to meet diverse needs NEST Pre-retirement Fund NEST Lower Growth Fund NEST Sharia Fund NEST Ethical Fund For members who seek higher returns and are prepared to take more risk Invested in return seeking assets – for example, global equities and diversified beta For members who want to take as little investment risk as possible Invested 100 per cent in a liquidity fund For members who join NEST late in their careers but still manage to build a large enough pot to buy a retirement income Invested 75 per cent annuity matching and 25 per cent liquidity funds For members who want to invest in a portfolio that meets ethical criteria Invested in ethical equities, along with gilts For members who want to invest in compliance with Sharia principles Invested 100 per cent in Sharia Global Equity Fund NEST Higher Risk Fund
    20. 20. Charges - how will NEST compare?
    21. 21. Getting your money out of NEST NEST scheme and online information Retirement income (Choose from NEST Retirement Panel) Shopping around for a retirement income Using the Retirement Tool Transfer out at retirement Taking your pot as cash
    22. 22. NEST help for employers <ul><li>Easy to use, 24/7 website </li></ul><ul><li>Scheme governance </li></ul><ul><li>Delegate options </li></ul><ul><li>Enrolment information templates </li></ul><ul><li>Automatic ‘phasing’ of contributions </li></ul><ul><li>Manage opt outs, including by telephone </li></ul><ul><li>Online file templates </li></ul><ul><li>No admin for ex employees </li></ul><ul><li>Services for members, including help at retirement </li></ul>
    23. 23. Employers can send enrolment and payments data via file uploads
    24. 24. NEST will automatically increase minimum contributions in line with ‘phasing’
    25. 25. Different people (or your advisers) can manage different parts of the process
    26. 26. NEST Corporation Chair - Lawrence Churchill Trustee Members Tom Boardman Sue Slipman Paul Hewitt Chris Hitchen Julius Pursaill Laurie Edmans Nigel Stanley Iraj Amiri Sharon Darcy
    27. 27. Contact us