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CBI Pensions Conference 2011 Francois Barker

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  • 1. CBI Pensions Conference 2011Auto-Enrolment: The Boardroom PerspectiveFrançois BarkerPartner and Head of Pensions, Squire Sanders Hammonds
  • 2. Agenda Why should I care? What do I need to know? What do I need to do? Key Legal and Practical Issues  Who are my "jobholders"?  How do I avoid the risk of employment claims?  Can I minimise the impact / extra cost? Key Action Points
  • 3. Why should I care? Penalties:  2 years in jail  £10k fine per day  ET claims Unbudgeted costs: Average business (7500 heads) - estimated costs of £3m p.a. Management downtime Reputational risks
  • 4. What do I need to know? All UK employers With "eligible jobholders"  Contract of employment or other contract to perform services personally  Working in the UK  Aged 22 to State Pension Age  Earning £7,475 or more p.a.  Not already in a suitable scheme Phased in from October 2012 by payroll size - including any scheme pensioners on company payroll
  • 5. What do I have to do? Auto enrol “eligible jobholders” into a QWPS or NEST Provide minimum defined benefits, or pay minimum DC contributions Register with and provide information to the Pensions Regulator within two months of “staging date” (www.tpr.gov.uk/staging) Keep records of auto-enrolments, opt ins, opt outs and contributions  legally for at least six years  practically for much longer Provide eligible jobholders with specified information Not induce eligible jobholders to opt out Every three years, re-enrol any opters out and update registration with Pensions Regulator
  • 6. What are the key Legal and Practical Issues? Who are my "jobholders"? How do I avoid the risk of employment claims? Can I minimise the impact / extra cost?
  • 7. Who are my “Jobholders”? All those with employment contracts Other "workers" with contracts to do work or perform services personally (except contracts with clients / customers of a profession or business) Difficult cases:  agency staff? Review agreements  casual / zero hours staff? Review agreements / circumstances  contractors / consultants? Review agreements / circumstances  company directors? Review service contracts  one person companies? Should be exempt
  • 8. How do I avoid the risk of employment claims? Avoid "prohibited conduct" at recruitment stage Avoid ending active scheme membership without providing a suitable alternative Avoid financial inducements to jobholders to opt out - note risks with:  flex benefits; and  high earners Avoid breaching new regime - workers have right not to suffer detriment Avoid dismissing for pensions / opt out reasons - automatically unfair Update HR / recruitment / pensions and benefits policies
  • 9. Can I minimise the impact / extra cost? Use three month waiting period (notice within one week) Implement salary sacrifice Level down other more generous benefit structures Implement pay freezes / other benefit adjustments (query inducements) Use more part timers Use single person companies Split your payroll DB mergers / risk management
  • 10. Key Action Points / Tactics / Strategies GET SOMEONE TO OWN THE ISSUE1. Identify your staging date and register with the Pensions Regulator within nine weeks2. Do you want to use NEST or a QWPS?3. DB or DC QWPS? Trust or contract based?4. Are amendments to your QWPS needed for it to qualify?5. Ensure your HR payroll systems can:  identify workers eligible for auto-enrolment (and re-enrolment) – including temporary and possibly agency staff;  provide information (but not the opt out form!);  process opt outs and deal with refunds;  process opt ins;  keep records for the appropriate period of time
  • 11. Key Action Points Tactics / Strategies6. Manage workforce by reviewing agency, director and contractor terms7. Update staff handbooks and HR processes accordingly8. Can any of your extra pension costs be offset (e.g. salary sacrifice)?9. Allow for consultation/contractual process if changing existing arrangements10. Notify in advance any high earners on enhanced protection who may be affected.
  • 12. CBI Pensions Conference 2011Auto-Enrolment: The Boardroom PerspectiveFrançois BarkerPartner and Head of Pensions, Squire Sanders Hammonds