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Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
Pension auto enrolment
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Pension auto enrolment

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How pension auto enrolment may affect your organisation.

How pension auto enrolment may affect your organisation.

Published in: Business, Technology
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  • 1. Auto Enrolment How Does This Affect You ? Colin Walker Independent Financial Advisor
  • 2. Today we will look at∗ Employer Awareness∗ What’s happening and when?∗ Preparing for Automatic Enrolment∗ When do I have to have my scheme in place?∗ What makes a scheme qualifying?∗ Who is eligible for Automatic Enrolment?∗ Contributions – phasing In
  • 3. Today we will look at∗ Simplified Certification Options∗ Opting Out∗ Additional Requirements∗ Enforcement∗ Employers- who deals with Auto Enrolment Issues?∗ Is there anything I can do to fund this more efficiently?
  • 4. Employers awareness of Automatic EnrolmentEmployers with no existing pension scheme: responses toAutomatic Enrolment - NESTAuto-Enrol into an Employer scheme:76% Unlikely8% Likely3% Highly UnlikelyAuto-Enrolment into NEST:66% Unlikely7% Likely18% Highly Unlikely9% UnsureSource: ACA survey of smaller firms views on Auto Enrolment And NEST 2011
  • 5. What’s Happening And When?∗ Auto Enrolment October 2012- September 2017∗ Staging date depends on employer size, but can be brought forward∗ Employer must enrol eligible employees (job holders into qualifying Scheme)∗ Provide information to all employees∗ Eventually required to pay 3% of qualifying earnings (minimum 8% overall)∗ Register with TPR and keep records∗ 4-8 million new savers in workplace from 2012∗ Additional £10bn-15bn annual savings by 2050
  • 6. Preparing for Automatic EnrolmentEmployer-no scheme Employer-with scheme∗ Find out Staging Date ∗ Find out Staging Date∗ Assess the workforce ∗ Assess the workforce∗ Determine earning definitions ∗ Review/determine earnings∗ Calculate costs definitions∗ Consider scheme type ∗ Calculate Costs∗ Communicate to workers ∗ Review existing Scheme∗ Plan implementation ∗ Consider scheme type∗ Enrol eligible job holders ∗ Communicate changes/terms to∗ Register with TPR & keep workers records ∗ Plan implementation∗ Contribute to workers ∗ Enrol eligible job holders pensions ∗ Register with TPR & keep records ∗ Contribute to workers pensions
  • 7. When do I have to have my scheme in place? Employer Staging Dates Employer size Auto-enrolment staging datePAYE scheme size Staging date120,000 or more 1 October 201250,000-119,999 1 November 201230,000-49,999 1 January 201320,000-29,999 1 February 201310,000-19,999 1 March 20136,000-9,999 1 April 20134,100-5,999 1 May 20134,000-4,099 1 June 20133,000-3,999 1 July 20132,000-2,999 1 August 20131,250-1,999 1 September 2013800-1,249 1 October 2013500-799 1 November 2013350-499 1 January 2014250-349 1 February 201450-249 1 April 2014 to 1 April 2015Test tranche <30 Employees 1 April 2015 to 30 June 201530-49 Employees 1 August 2015 to 1 October 2015Less than 30 Employees 1 January 2016 t0 1 April 2017New Employers 1 May 2017 to 1 February 2018The rules for staging within each size grouping have still to beconfirmed.
  • 8. What makes a scheme qualifying∗ Does it permit Automatic Enrolment?∗ Are employees enrolled automatically within 3 months of joining?∗ Does the scheme have a “default” investment option?∗ Recognising the likely characteristics & needs of employees∗ Appropriate balance between risk & return∗ Glide path to safer assets as retirement approaches∗ Does it meet one of the minimum contribution tests?∗ Does it have an opting out facility?
  • 9. Who is eligible for Automatic Enrolment? Assessing and categorising the workforce 2012/2013 levels Qualifying Earnings Age < £5,564 £5,564 - £8,105 > £8,10516-21 Entitled Worker Non-eligible Non-eligible jobholder jobholder22-SPA Entitled Worker Non-eligible Eligible jobholder jobholderSPA-75 Entitled Worker Non-eligible Non-eligible jobholder jobholder
  • 10. Contributions – phasing inBased on Qualifying Band Earnings Steady State Defined contribution 1% employee 3% employee 5% employee contribution contribution contribution Defined contribution 1% employer 2% employer 3% employer contribution contribution contribution Staging periodOctober 2012 October 2017 October 2018
  • 11. Simplified Certification OptionsQualifying Earnings Definition (2012/13) – P60 income from £5,564 to £42,475 Employer minimum Minimum total Full basic salary (pensionable pay) 4% 9%Full basic salary, and at least 85% of 3% 8% total pay is pensionable Total earnings (p60) 3% 7%Employer industry & demographic will drive decisions
  • 12. Opting Out Opting out 1 month Opt Fill in Refund Inform RefundEngage Your Window out Notice Worker Provider Employer workforce Notice Review 1 month Opt out Fill in Refund Inform RefundEngage your Window Notice Notice worker Provider Employer WorkforceDefault ‘re-enrolment date’ is 3rd anniversary of Employer staging date every3 years.
  • 13. Additional RequirementsAll Employers will have additional regulatoryrequirements∗Employers prohibited from incentivising opt outs∗Register with TPR to show they are meeting theirduties∗Payments will be monitored by Administrators orScheme Trustees who need to report failures∗Must keep records for 6 years∗Must retain Opt in & Opt Out notices for 4 years
  • 14. EnforcementFines from the RegulatorStage 1 - A compliance/unpaid contribution noticeStage 2 - Fixed penalty of £400Stage 3 – Escalating daily penalties Number of Persons Prescribed daily rate 1-4 £50 5-49 £500 50-249 £2,500 240-499 £5,000 500+ £10,000
  • 15. Employers – Who Deals With Auto Enrolment Issues?Number of Employees Pensions Dept/Human large Resources medium ? ‘Payroll’ small Organisation
  • 16. Is there anything I can do to fund this more efficiently? “…the overarching view is that salary sacrifice is here to stay, and will prove to be a valuable tool for advisers looking to manage the transition to auto enrolment.” Source: Corporate Adviser – September 2010
  • 17. Questions

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