Blake Lapthorn and Hays Recruitment - Auto enrolment seminar - 26 March 2013
Blake Lapthorn and Hays – auto enrolment – helping you plan,prepare and cope with the challenges The what, why, how and when The practicalities and the opportunities 26 March 2013 Seacourt Tower
Auto enrolment – helping you plan, prepareand cope with the challenges Welcome Housekeeping The book of the film What we will cover today and what we will not cover Participate Challenge Enjoy Adrian Lamb Blake Lapthorn firstname.lastname@example.org
Auto enrolment – helping you plan, prepareand cope with the challengesWhat we will cover today What we will cover on 25 April The basics The employment What it will cost considerations The challenges for systems Communications – the The different vehicles what, when and how The pros and cons and trust The HR issues and and contract based challenges arrangements The strategic opportunity
Auto enrolment – helping you plan, prepareand cope with the challenges8.30 am to 10.30 am Introduction The basic requirements – Shaun Thompson, Blake Lapthorn The employment considerations – Debbie Sadler, Blake Lapthorn Communications – what when and how – Samantha Waterhouse – Shilling Communications The HR challenges – David Miles, Blake Lapthorn Open forum/Q&A/Summing up
Who does it apply to?Employers and workers An employer is defined as anyone who has a contract with a ‘worker’ An employer must identify whether they have a ‘worker’ – in some cases this may not be clear As a minimum, an employer with one or more worker(s) will need to register with The Pensions Regulator It is important to understand the different categories of worker –and the duties they will have in respect of each category
What does an employer have to do? Automatic enrolment Opting in, joining and contractual enrolment Managing opt outs Providing information Make/maintain employer contributions Keep records about their workers and the pension scheme Keep track of ages and earnings
When and how? Do you know your staging date? Communicate at the right time to the right person Enrol the right workers at the right time Pay the right contributions at all times
Auto enrolment – helping youto understand the requirements and to deal with the challenges Shaun Thompson Pensions team, Blake Lapthorn email@example.com
Auto enrolment in a nutshell Applies to all UK companies! Workforce is split into eligible, non eligible and entitled workers Different obligations in relation to each category of worker Some obligations in force now, others will come into force in coming months and years Re-enrolment obligations
Auto enrolment route plan Know what your obligations are and when they apply to you Know how you’re going to comply with them Planning, preparation and budgeting is vital – give yourself enough time!
Staging date What is it? When is it? Do you know when your company’s staging date is? Remember pre staging date obligations! Bring forward your staging date?
Identifying your workforce What is a worker and are they ordinarily working in the UK? Know which of your employees are eligible jobholders, non eligible jobholders and entitled workers. Keep this under continual review – employees can switch between categories! Can your processes and systems cope with this?
What is a worker?Three Tier Test:- Individual works under a contract (express or implied); Individual is under an obligation to provide a personal service to the other party; and The other party to the contract is not a customer of a business undertaking carried on by individual Not always as simple as it may seem!
Jobholders and entitled workers Eligible jobholders – Workers – Aged between 22 and SPA – Earning over income tax personal allowance threshold (currently £8,105, due to rise to £9,440 from 6 April 2013) Ineligible jobholders – Workers – Aged between 16 and 22 or SPA and 74 who earn over income tax personal allowance threshold; or – Any age who earn between NI Lower Earnings Limit (£5,564) and income tax personal allowance threshold Entitled worker – Any age with earnings below NI Lower Earnings Limit Know your obligations in relation to each category and watch out re opt outs and opt ins!
Identifying different types of worker (April 2013) Age 75 OPT IN Employer contribution SPA OPT IN OPT IN AUTO-ENROL No employer Employer Eligible contribution contribution jobholder (“Entitled workers”) Qualifying Earnings (QE) 22 OPT IN Employer contribution 16 Earnings £5,568 £9,440 £41,450 Qualifying Earnings Upper Earnings Trigger Limit Threshold
Pay reference periods What is a pay reference period? Vital to work out what your pay reference period is and what earnings are paid in it
Earnings “spikes” – low earners The earnings trigger applies pro-rata in every pay period – so £786.66 p.m., £181.54 p.w. John normally earns £460 per month, so is not auto-enrolled as he earns below the Earnings Trigger of £9440. However in December 2013 (for one month only) John earns £800 – over the £786.66 trigger John must be auto-enrolled in December even though his total expected annual earnings are still less than the Trigger. Total contributions are 2% of £336 (£800 less £464 QET) – ie £6.72 for the pay period In January to July 2014 he earns £460 each month, below the QET, so no contributions are deducted In August 2014 he gets a 5% pay rise, and earns £483, so contributions need to be paid in respect of £19.00 of monthly earnings At 2% that is a contribution of £0.38 for the pay period
Postponement Employer can delay auto enrolment obligations for up to three months Potentially very useful if you have short term employees Prescribed notice requirements Opt ins during postponement period
Notices and record keeping requirements Prescribed requirements which employers must meet Remember deadlines and time limits! Have appropriate administration processes in place!
Penalties for non-compliance Pensions Regulator can intervene and require certain steps to be taken and/or impose financial levies for non- compliance Fines can be of up to £10,000 a day Criminal offences Should help companies focus on their duties and obligations!
- Put pension saving in context- Provide regular prompts- Help set targets and goals- Targeted and personalised- Counteract known misconceptions
What we’ve learnt…1. It’s more about payroll, technology & processes – Data quality is poor – Invest time to save time2. Focus on compliance – Eligibility tools – Governance – Initial communication – On-going communication
What we’ve learnt…3. Pre- enrolment promotion does help –Government “I’m in campaign” hasn’t registered4. Long term ‘engagement’ is not in focus but it should be. –Think about perception –Don’t forget about HR5. Keep it simple!
Is your plan coherent? Business Strategy Employer Employees Brand Needs Legal obligations Reward Culture Strategy Talent Managem ent
Are your HR and employment processes fitfor purpose? Recruitment and Induction process Opt-in/out processes (including refund through payroll): Other HR processes: Communications about Pensions Communications about other Benefits
Are your HR ,payroll and pension adminsystems fit for purpose? Robust enough and ready Effective links to your communications processes Fully specified to deal with AE in all circumstances
HR summary Not just a HR or pension change or initiative Collaborative multi-departmental approach Strategic perspective on the role of pensions Opportunity for a complete review of benefits Get the processes right Focus on education and communications Staging and triennial re-enrolment spikes Measure the cost and impact of AE….an opportunity to demonstrate value of HR
Auto enrolmentHR Issues and Challenges David Miles HR Adviser Blake Lapthorn firstname.lastname@example.org
Auto enrolment – helping you plan, prepareand cope with the challenges – some recentheadlines• Asda reports 8% auto-enrolment opt-out rate• Royal Mail encouraged by 16% opt-out rate• Mastertrust chiefs debate capacity crunch and opt-ins• OECD calls on government to raise auto- enrolment contributions to 15%• Companies in limbo over contracted-out workers
Auto enrolment – helping you plan, prepareand cope with the challengesSome obvious (and not so obvious) questions and comments What does it have to do with a pension? The bare minimum will not be adequate Is auto enrolment just a precursor to more tax or NI? Is it right for everybody? If it has little to do with pensions what does it have to do with? Lots of choices, lots of work, but limited resources and possibly limited time Big picture should not be ignored What would success look like?
Auto enrolment – helping you plan, prepareand cope with the challenges Are you an employer/do you have workers? Do you know your workers – eligible, non-eligible and entitled? Do you know your staging date – 1 September 2013 for 1250 to 1999 employees – 1 April 2015 for 50-53 employees – So next two years will catch a very large number of workers and employers Do you know your pay cycle(s)? How will you cope with variable earnings for low and high earners? Will there be capacity when you are ready to go?
Auto enrolment – helping you plan, prepareand cope with the challenges What about your contracts, terms and conditions, etc? Are you ready for all the communications you will need – there are lots! Who will do all of this work? How will you cope? Do you have a plan? Are you prepared? Have you started?
Auto enrolment – helping you plan, prepareand cope with the challengesMenu/to do list (if you don’t have one already) Nominate a point of contact Assemble project team Know your staging date Develop a plan Assess your workforce Engage with your suppliers and advisers Automate what you can Review your current arrangements Communicate to ALL your workers Automatically enrol Register Keep records Contribute
Auto enrolment – helping you plan, prepareand cope with the challengesThe next episode - 16 April 2013, New Kings Court, 25April, Oxford – What it will cost – the hard and the soft costs – The challenges for systems – The different vehicles – The pros and cons and trust and contract based arrangements – The strategic opportunityFeedbackContinue discussions over coffeeThank you for coming