Evolving Reward & Benefits  Auto Enrolment – are you ready? Presented  by  Peter Waller, Chairman
Today ’ s Session <ul><li>Auto enrolment – getting you ready </li></ul><ul><ul><li>What is changing </li></ul></ul><ul><ul...
BENEFEX BACKGROUND
Who are Benefex?  <ul><li>Deliver Reward & Benefits for over 1 million employees </li></ul><ul><li>End to end – from desig...
AUTO ENROLMENT
 
Why make pensions compulsory?  13.9M People have no workplace pension provision Source: NAPF
<ul><li>86%  </li></ul><ul><li>of  </li></ul><ul><li>employers have  no  workplace pension provision </li></ul>
<ul><li>31%  </li></ul><ul><li>of  </li></ul><ul><li>employees do not take up the offer of an employer contribution </li><...
7 Million Employees are not saving enough for retirement Source: DWP
<ul><li>55%  </li></ul><ul><li>of  </li></ul><ul><li>the entire UK workforce not saving enough for retirement </li></ul>
So where did it come from… <ul><li>The Pensions Act 2008 – Workplace Pension Reforms </li></ul><ul><li>Structured around r...
So by October 2016… <ul><li>All organisations must enrol employees in a  ‘qualifying scheme’ </li></ul><ul><li>All organis...
Auto enrolment – what we expect to see  <ul><li>It will boost membership levels particularly in: </li></ul><ul><li>Lower e...
Auto enrolment – lessons learned <ul><li>Government predictions of 55% to 80% take up with a 75% central estimate </li></u...
WHO?
Who do you need to auto enrol – Age? 22 and above State Pension Age EMPLOYEES UNDER 22 BUT OVER 16 Do not need to be opted...
Who do you need to auto enrol – Earnings? Auto Enrolled Based on Earnings £0 £50,000 Below this there is no requirement to...
WHEN?
Timing of your obligations PENALTY TIME! All employers should have started auto enrolment . New businesses will need to of...
Timing – Processing Employees You can choose when to enrol employee here ‘ Waiting Period ’ Backdating Employees have the ...
Opting out <ul><li>All employees have the right to opt out but must be an ‘active’ decision </li></ul><ul><li>It must be o...
WHAT?
What will you have to pay? Over £5,715 Qualifying Earnings Lower Limit will increase each year in line with the threshold ...
What will you have to pay – min. contributions <ul><li>Rules require both a min. total contribution and min. employer cont...
Minimum contributions <ul><li>Total can be paid for </li></ul><ul><ul><li>Entirely by the employer </li></ul></ul><ul><ul>...
SO WHERE IS EVERYONE ON THIS? INTERACTIVE SESSION
WHAT ARE WE SEEING HAPPEN?
What strategies are we seeing in practice Qualifying Scheme Only Organisations with a qualifying structure and supportive ...
What can we do to help? <ul><li>ENROLLER™ – Design  Planning, strategy and creating a roadmap for delivery of Auto Enrolme...
<ul><li>Thank you, any questions? </li></ul>
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Evolving Reward & Benefits Auto Enrolment – are you ready?

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Evolving Reward & Benefits Auto Enrolment – are you ready?

Presented by Peter Waller, Chairman Benefex

www.cfoevent.com

Published in: Economy & Finance, Business
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  • So what is today about – for us it is looking to clarify the obligations of each organisation when it comes to auto enrolment The Why What Where When and How Clearly 2 hours is only 2 hours but we have tried to cover as much content as we can.
  • I know we know a lot of you in the room but I just wanted to Should we change deliver for support in the last line?
  • Lots of coverage, mostly negative Personal opinion Fundamentally a good idea Compulsory should be that in my opinion Going to be a challenge as all rules still not agreed – Bill yesterday
  • Large numbers often end up meaningless in my view I get 5/10/100/1000 as I can visulaise but 100K / 1M / 1BN numbers just trail off
  • Sounds like a lot…but I know my self that I can easily visualise small ‘real’ numbers 2 people haven’t done x, 100 people haven’t done Y, but once it gets into hundreds of thousands, millions, billions….it all becomes a bit unreal so what is that really…
  • We will go into some detail during this session, but in essence these are the principal obligations….
  • Now clearly some will opt out but that is the split that they expect
  • 2 key criteria are – age and earnings
  • Timing is key Currently everyone around the table has time (although not lots) Clock is ticking With timing – focus on – Timing of your obligations – called staging Timing of processing employees – current and new joiners
  • Discuss M&amp;S – very focal about constant changes and volume of people to run scheme Average pension take up in target sectors = &lt;15% - retail, manufacturing, leisure, blue collar (JOKE) Third box – bulk of mid to large employers for July 2014 You will receive a 12 month and 3 month reminder letter Can do advanced preparation – test process and send live The Pensions Regulator – will educate – 2011/12, enable throughout this process on screen and enforce from the Oct 2016 live date
  • Tending to see employers opting for a selection window similar to that of Flexible or online Benefits – employees provided online access, choice, communications and education
  • Really looking to take a hardline on opt outs…and how they are achieved – even to the level of not enabling you to issue packs with forms enclosed.
  • For the what there is = what qualifies as earnings? - What are the min. contributions?
  • Should I include over 7475 is the limit for auto enrolment Per week = £109 to £734 Per Month = £476 to £3,182
  • Pensions Regulator yet to publish any guidance notes this is expected in May but currently in a state of uncertainty – changeable…
  • Levelling down is probably the single largest concern of the Pensions Regulator with this legislative move. It is impossible to know but survey says between 3% (DWP) and 41% (ACA) will adopt this approach and level employees down to meet the minimum requirements and obligations
  • Evolving Reward & Benefits Auto Enrolment – are you ready?

    1. 1. Evolving Reward & Benefits Auto Enrolment – are you ready? Presented by Peter Waller, Chairman
    2. 2. Today ’ s Session <ul><li>Auto enrolment – getting you ready </li></ul><ul><ul><li>What is changing </li></ul></ul><ul><ul><li>How </li></ul></ul><ul><ul><li>When </li></ul></ul><ul><ul><li>For who </li></ul></ul><ul><li>Interactive session and discussion </li></ul><ul><li>Practical implementation thoughts </li></ul>
    3. 3. BENEFEX BACKGROUND
    4. 4. Who are Benefex? <ul><li>Deliver Reward & Benefits for over 1 million employees </li></ul><ul><li>End to end – from design and communication to technology and ongoing support </li></ul><ul><li>Won over 20 industry awards </li></ul><ul><li>Most secure Reward & Benefits provider in the UK </li></ul><ul><li>Live in 25 countries </li></ul><ul><li>Whatever your strategic roadmap we can deliver it </li></ul>
    5. 5. AUTO ENROLMENT
    6. 7. Why make pensions compulsory? 13.9M People have no workplace pension provision Source: NAPF
    7. 8. <ul><li>86% </li></ul><ul><li>of </li></ul><ul><li>employers have no workplace pension provision </li></ul>
    8. 9. <ul><li>31% </li></ul><ul><li>of </li></ul><ul><li>employees do not take up the offer of an employer contribution </li></ul>
    9. 10. 7 Million Employees are not saving enough for retirement Source: DWP
    10. 11. <ul><li>55% </li></ul><ul><li>of </li></ul><ul><li>the entire UK workforce not saving enough for retirement </li></ul>
    11. 12. So where did it come from… <ul><li>The Pensions Act 2008 – Workplace Pension Reforms </li></ul><ul><li>Structured around reforming the current pensions system to address both this savings gap and also the pensions crisis </li></ul><ul><li>Paved the way for: </li></ul><ul><ul><li>A compliance scheme enforced by the Pensions Regulator – Auto Enrolment </li></ul></ul><ul><ul><li>A new workplace savings scheme called the National Employment Savings Trust (NEST) </li></ul></ul><ul><li>The Pensions Bill 2011 </li></ul><ul><li>Still not all agreed </li></ul>
    12. 13. So by October 2016… <ul><li>All organisations must enrol employees in a ‘qualifying scheme’ </li></ul><ul><li>All organisations must also: </li></ul><ul><ul><li>Make a min. contribution for each employee </li></ul></ul><ul><ul><li>Provide information about the scheme to all employees </li></ul></ul><ul><ul><li>Deduct contributions from their wages </li></ul></ul><ul><ul><li>Send contributions to the pension scheme provider </li></ul></ul><ul><ul><li>Register with the regulator </li></ul></ul><ul><ul><li>Maintain scheme records </li></ul></ul>
    13. 14. Auto enrolment – what we expect to see <ul><li>It will boost membership levels particularly in: </li></ul><ul><li>Lower earners </li></ul><ul><li>Minority ethnic groups </li></ul><ul><li>Women </li></ul><ul><li>Of the additional 7 million people who will start saving: </li></ul><ul><li>0.5M will go into a brand new scheme </li></ul><ul><li>2.5M will go into an existing scheme </li></ul><ul><li>4.0M will go into NEST </li></ul>
    14. 15. Auto enrolment – lessons learned <ul><li>Government predictions of 55% to 80% take up with a 75% central estimate </li></ul><ul><li>Current schemes (NAPF UK Survey data): </li></ul><ul><ul><li>Where auto enrolment – 89% take up (US = 91%) </li></ul></ul><ul><ul><li>Where voluntary joining – 42% take up (US = 61%) </li></ul></ul><ul><li>Combined survey data points to: </li></ul><ul><ul><li>54% stay in </li></ul></ul><ul><ul><li>46% opt out </li></ul></ul><ul><li>In New Zealand – Kiwi-Saver = 63% take up </li></ul>
    15. 16. WHO?
    16. 17. Who do you need to auto enrol – Age? 22 and above State Pension Age EMPLOYEES UNDER 22 BUT OVER 16 Do not need to be opted in but must be provided information and the right to opt in if they wish EMPLOYEES STATE PENSION AGE BUT UNDER 75 Treated same as under 22. At 75 contributions must stop. Auto Enrolled Based on Age Works in the UK (or ordinarily in the UK) under a UK contract 16 65
    17. 18. Who do you need to auto enrol – Earnings? Auto Enrolled Based on Earnings £0 £50,000 Below this there is no requirement to join but can join if they choose. No employer requirement for contribution below £5,715. Once over £7,475 we need to auto enrol all employees. Rules to prevent ’ accidental ’ enrolments (e.g. bonus one month putting you over £7,475) ‘ Earnings ’ includes bonuses, over time and statutory maternity, paternity and adoption pay Over £7,475 2011-2012
    18. 19. WHEN?
    19. 20. Timing of your obligations PENALTY TIME! All employers should have started auto enrolment . New businesses will need to offer it from day one OCTOBER 2012 Employers with PAYE schemes of over 120,000 employees Group 1 AUG 2014 to FEB 2016 Employers with small PAYE schemes fewer than 50 employees (a sample of these will need to be live for March 2014) Group 4 NOV 2012 to MAR 2013 Employers with large PAYE schemes 10,000 to 120,000 employees Group 2 OCT 2013 to JUL 2014 Employees with small PAYE schemes 50 to 1,249 employees Group 4 MAR 2016 to SEP 2016 Employers setup with new PAYE schemes between April 2012 and 2016 Remainder APR 2013 to SEPT 2013 Employers with medium PAYE schemes 1,250 to 9,999 employees Group 3
    20. 21. Timing – Processing Employees You can choose when to enrol employee here ‘ Waiting Period ’ Backdating Employees have the right to request backdated contributions Short Term Contracts <3 months can be excluded Prevented from postponing if you have done so in the last 12 months Qualifying DB Schemes Qualifying DB Schemes are able to defer auto enrolment until Oct 2016 Month 1 Month 3 Month 6+
    21. 22. Opting out <ul><li>All employees have the right to opt out but must be an ‘active’ decision </li></ul><ul><li>It must be on paper and with a ‘wet’ signature </li></ul><ul><li>Administrative onus sits with Employer </li></ul><ul><li>Must opt people back into the scheme in 3 years </li></ul><ul><li>Employers cannot promote opt out in any way </li></ul><ul><li>Cannot recruit people on the basis that they will opt out </li></ul><ul><li>Not able to induce or incentivise people to opt out </li></ul>
    22. 23. WHAT?
    23. 24. What will you have to pay? Over £5,715 Qualifying Earnings Lower Limit will increase each year in line with the threshold at which National Insurance is paid Note: ‘ Earnings ’ includes bonuses, overtime and statutory maternity, paternity and adoption pay Under£38,185 Upper Limit will increase each year in line with average earnings £0 £50,000
    24. 25. What will you have to pay – min. contributions <ul><li>Rules require both a min. total contribution and min. employer contribution </li></ul><ul><li>Based on either: </li></ul><ul><ul><li>% of qualifying earnings for NEST </li></ul></ul><ul><ul><li>% of pensionable pay for other qualifying schemes </li></ul></ul><ul><li>For most defined contribution schemes total contributions will </li></ul><ul><ul><li>Start at 2% (total) on your ‘staging’ date; and </li></ul></ul><ul><ul><li>Increase to 8% (total) by 2017 </li></ul></ul>
    25. 26. Minimum contributions <ul><li>Total can be paid for </li></ul><ul><ul><li>Entirely by the employer </li></ul></ul><ul><ul><li>Combination of employer and employee </li></ul></ul><ul><li>Contribution limits </li></ul><ul><ul><li>To NEST are capped at £4,200 per annum </li></ul></ul><ul><ul><li>Other qualifying schemes are uncapped </li></ul></ul><ul><ul><li>High earner restrictions remain </li></ul></ul>*Example of employee contribution is less basic tax relief of 20% Employers will need to assess that contributions (or accruals)are sufficient. And certify minimum requirements are met
    26. 27. SO WHERE IS EVERYONE ON THIS? INTERACTIVE SESSION
    27. 28. WHAT ARE WE SEEING HAPPEN?
    28. 29. What strategies are we seeing in practice Qualifying Scheme Only Organisations with a qualifying structure and supportive provider are rolling these out to all Split Combination of NEST for one population and qualifying scheme for another Combination Everyone in NEST up to the Maximum contribution then anything above into other scheme Minimum Conts Applying the absolute minimum contribution for new joiners ensure min. additional budget spend Levelling Down Offering all employees the minimum legal contribution regardless of historic entitlement. Recruitment Active recruitment of excluded groups. Limiting contracted hours and therefore potential additional costs.
    29. 30. What can we do to help? <ul><li>ENROLLER™ – Design Planning, strategy and creating a roadmap for delivery of Auto Enrolment including the business case </li></ul><ul><li>ENROLLER™ – Communicate Whether utilising bespoke or off the shelf tool we are able to assist you with communicating the change to you every employee </li></ul><ul><li>ENROLLER™ – Complete </li></ul><ul><li> Whatever your scheme we can provide a full end to end auto enrolment service including our Compliance Guarantee™ </li></ul><ul><li>Join us on </li></ul><ul><li>Just fancy a chat about it…feel free to call the team on 0845 129 8636 or email autoenrolment@benefex.co.uk </li></ul>
    30. 31. <ul><li>Thank you, any questions? </li></ul>

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