Auto Enrolment: Are You Ready?

MAR14WEBINAR These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Neil Esslemont
Head of Industry liaison team
Rebecca Woodley
Industry liaison team
13 March 2014
Automatic enrolment webinar
Are you ready?
The information we provide is for guidance only and should not
be taken as a definitive interpretation of the law.

Introductory information
• This webinar assumes a basic understanding of automatic enrolment
• You may wish to look at our planning tool for more information
• These slides are available to download now

Getting ready for automatic enrolment
• Understand the employer duties.
• Engage the professionals you will use to help you with your employer duties.
• Choose a pension.
• Check the suitability of payroll and IT software.
• Find out who to enrol.
• Decide how you will communicate the pension changes to your workforce.
• Determine if you will use postponement and how.

Automatic enrolment legislation gives employers a duty to:
 automatically enrol all eligible jobholders
 communicate to workers providing timely and appropriate information
 allow non-eligible jobholders to opt in and entitled workers to join
 manage opt outs within the opt-out period and promptly refund contributions
 automatically re-enrol all eligible jobholders every three years
 complete the Declaration of compliance (Registration) with the Regulator
 keep records, and
 pay the pension contributions to the scheme provider
The employee safeguards state that employers:
 must not induce workers to opt out or cease membership of a scheme
 must not indicate to a potential jobholder that their decision to opt out will
affect the outcome of the recruitment process.
Overview of legal duties and safeguards

Planning tool:
www.tpr.gov.uk/planner
Planning timeline

Engage professional help
You may wish to ask the following for their help:
• pension providers,
• financial advisers,
• payroll software or middleware providers,
• accountants, and/or
• bookkeepers.
You should consider:
• what elements of the duties they will help you with, and
• remember that the responsibility with complying with the
automatic enrolment legislation will remain with the employer.

What to do before your staging date
• Choose a pension
• Examine your workforce
• Communicate to staff
• Check processes and software
• Finalise your action plan
These may need to be
done at the same time or
in any order

Pension schemes:
• Defined contribution (DC) – eg money purchase
• Defined benefit (DB) – eg final salary or career average
DC schemes can be contract-based or trust-based:
• A contract pension scheme is where there is a contract between the
employee/worker and the pension provider.
• In a trust-based scheme, the trustees are responsible for delivering the
terms of the trust and for running it in the best interests of its beneficiaries.
• Master trusts offer pensions to employees of more than one employer.
• Some pension providers specialise in providing master trust pensions
(also known as super trusts).
Pension scheme types

What pension schemes can be used?
 must be registered in the UK or EEA*
 must have no barrier to automatic enrolment
 must be a qualifying scheme
Automatic enrolment scheme
Qualifying scheme
 must be tax registered:
 and meet minimum criteria
Workers already
active members of a
qualifying scheme do
not need to be
automatically enrolled
Must be used
for automatic
enrolment and
opt ins
Employers will
need to contribute
to the pension
scheme
*European Economic Area states
Employers may also
use a qualifying scheme
or an automatic
enrolment scheme for
entitled workers
Scheme for
entitled
workers
 scheme
is registered
Employers are not
required to make an
employer contribution

Using an existing pension scheme
• If you have an existing scheme*, what can you use it for?
• Is it a qualifying scheme and does it satisfy the minimum criteria?
– If it is not a qualifying scheme, it may be possible to change the
scheme rules, so that active members would not need autoenrolment.
– If it is a contract-based scheme, it is likely to need a jobholder
agreement for each active member (an agreement by the member to
pay the difference between the employer contributions and the legal
minimum total contribution).
• Do you also want to use this scheme to automatically enrol your workers?
– Your existing scheme provider may not allow it be made an automatic
enrolment scheme (eg the scheme provider would need to provide
opt out forms on request).
* View our webinar on Implementing automatic enrolment systems and pension schemes.

Choosing a new pension – factors to consider
It is the employer’s responsibility to choose a pension scheme for their workers.
Some things to consider:
• Most people will stay in the default fund
– does it provide value for money?
• Some providers can cater for a wider range of languages for members
than others.
For help on how to select a good scheme, please see:
www.tpr.gov.uk/employers/setting-up-a-pension-scheme.aspx

Choosing a new pension – factors to consider continued
Different pension providers may have different criteria for accepting employers
and may ask you about:
• the number of staff expected to be enrolled
• estimated average pension contributions per member per month
• payroll frequency (some providers may not assess weekly paid staff).
You may also wish to view our webinar on ‘Implementing automatic enrolment
systems and pension schemes’ (see our Useful links slide).

Choosing a new pension – how to find one
How will you find a suitable pension if you need or want to use a new scheme?
• For further information and a list of pension providers see:
– The National Association of Pension Funds (NAPF)*
– The Association of British Insurers(ABI)*
• Pension providers
– Not all pension providers may offer you a pension scheme
– They may not give you an answer immediately so ask for their timescales
– Providers may be at full capacity or have long waiting times
– You may wish to ask more than one provider at a time.
• National Employment Savings Trust (NEST)* is a pension scheme that all
employers can use to meet their duties  but don’t leave it too late.
* These can be found on our Useful links slide

Mandatory communications to staff
There are a number of occasions where an employer is required by law to
communicate with their workers:
• At staging you need to communicate to all workers, even scheme members.
• The information will need to be provided directly – by letter, email
(or other direct means).
– Who will do what communications – employer or the pension provider?
– You are likely to want to customise the letter templates*.
• When will you issue these letters/email (and at what point in the pay cycle)?
• How will you check your employee data is accurate (eg addresses)?
 Remember: statutory opt out forms should not be issued by the employer.
* See our Useful links slide

Additional communications to staff
Many employers will want to communicate more than the statutory minimum:
• Are your staff aware of any changes to existing pensions arrangements?
• Do you need to formally consult with staff/unions on these changes?
• Many employers have chosen to communicate early to their staff.
• You may wish to use wall posters or news bulletins (eg paper or intranet).
• There is a ‘We’re all in’ poster available to download on our website (you can
add your company name and logo) at www.tpr.gov.uk/employers/raising-
awareness-about-automatic-enrolment.aspx

How and when to communicate to workers
• Statutory communications must be direct (eg letter, email, payslip).
• At staging, you need to communicate to all workers, even scheme members.
• Need to inform of rights the first time* a worker becomes a particular
category
*Unless they are already an active member of a scheme provided by the employer and, if they are a jobholder, the
scheme is a qualifying scheme. The use of a general notice A or B postponement notice discharges this duty.
Communication Deadlines for communication
Existing scheme members at staging 2 months after staging
Workers who are not already in a qualifying pension scheme
at staging
6 weeks after staging (or 1 month after staging, for employers
staging on or before 1 March 2014)
Enrolment notifications and
transitional period notices
6 weeks from the assessment date (eg before midnight of
Monday 12 May, if assessment date is Tuesday 1 April).
Postponement notices 6 weeks from the day after the assessment date (eg before
midnight on Tuesday 13 May, if assessment date Tuesday 1
April).

What to communicate to workers
• On staging, workers already members of a qualifying pension scheme must
be provided with information* about the scheme.
• Non-eligible jobholders and entitled workers must be provided with
information* telling them about their right to opt in or join a pension scheme.
• For eligible jobholders being automatically enrolled (and non-eligible
jobholders being enrolled after opting in) they must be provided* with:
 information about their enrolment,
 what it means for them, including the contributions, and
 their right to opt out.
• Workers subject to a postponement need to be given key information* such
as the length of the postponement period and their rights to opt in or join.
* See Useful links for template letters

Check suitability of payroll and IT systems
• What software* will you use to carry out:
– assessment
– enrolment
– communications, and
– calculation of pension contributions
• This is likely to require data held by payroll and HR systems.
• Choices:
– payroll software, and/or
– non-payroll software – middleware
(this may be offered by the pension scheme provider).
* View our webinar on Implementing automatic enrolment systems and pension schemes

Automatic
enrolment
process
Assessment process
Assessment results
Payment £
Payroll data £
Payroll
instructions £
Pension scheme
rules £
Enrolment
letter to worker
Enrolment
instructions
to pension provider
Calculate
deduction
Assess
Run
payroll
Enrol

Software issues
• Do you want to use payroll or middleware software to assess your workers?
– can your payroll provider do this for your payroll product/version?
– or would you need to upgrade your payroll system to do this?
• How will you automate staff communications (eg mailmerge software)?
• Can your IT/computer systems cope if you need to run additional software?
• How will you ensure all your data is accurate and up to date
(eg NI numbers, dates of birth, addresses).
• Where is the data stored (eg on an integrated HR/payroll or separately)?
• How will these systems work together – what data standards do they
support? Will you need to send data over your network or over the internet?
• Will all of the software do what you need it to do?
• You should plan to test these systems before you go live.

Finalising your action plan
What needs to happen after staging?

Automatic enrolment and Opt Outs
Window for possible Opt-Out period
Latest possible date
opt-out period ends
(unless invalid opt-out
extends opt-out period
to 6 weeks)
1 month
Earliest possible date
opt-out period ends
Latest date by which active membership and provision
of jobholder information and enrolment information
must be achieved and therefore the latest possible start
date for 1 month opt-out period.
6 weeks
Joining window
Backdating of scheme
membership to the
automatic enrolment date
Earliest possible start date
for 1 month opt-out period
1 month

Scenario A
Assessment
date on first
day of PRP
Yes
UK worker
aged 22 to SPA?
No statutory
duty to enrol
No
Staging date
31st
C
1st
R P0 C
1st
R P1 C
1st
R P2
31st30th
Yes
Total QE
paid in PRP
> earnings
trigger ?
No
Staging and a calendar month PRP
• Pay reference period runs from 1st
to last day of each month
• Assessment date is 1 April
• Total qualifying earnings may not
be known until payroll cutoff or later.
If the worker needs to be
automatically enrolled:
• First deduction needs to made
in payday P1 on 28 April
• Opt-Out window may not start
until after deduction taken
• Scheme contribution based on
100% of May pensionable pay.
Monthly pay
reference period (PRP)
Key:
C – Payroll cutoff
R – Payroll run
P – Payday
Issue letter to worker
and set up active
membership
Opt-Out
window could start
28th 28th
28th
Automatic enrolment
triggered
March April May

Postponement
• Postponement suspends the duty of automatic enrolment and the need to
assess and can be used:
– at the employer’s staging date for any or all existing workers
– on the first day of employment for any new joiner after the staging date, and
– on the date a worker meets the criteria to be an eligible jobholder.
• Only one postponement per worker can be made at a given time.
• Each worker can be postponed from one day up to maximum of three months.
• The employer must notify any postponed worker within six weeks of the start
of postponement.
• The worker has the right to opt in or join during postponement.
• Employer must assess on the last day of postponement and:
– automatically enrol eligible jobholders, and
– for those workers not eligible, monitor them each future pay period.
Postponement does
not change or delay
the staging date

6 weeks
Timescales for postponement at staging
6 weeks
Joining window
membership to the
automatic enrolment date
Up to 3
months
postponement
Staging date
Assessment date/ automatic
enrolment date
(for eligible jobholders)
Opt ins could
be received
from this date
Latest date by which active
membership and provision of
jobholder information and
enrolment information must
be achieved.
Postponement
notices must be
issued by this date
(for staff postponed
on the staging date)

Opt-ins – one calendar month pay reference period
6 weeks
Joining window
Staging date
Earliest opt in enrolment date
(for monthly paid jobholders)
Opt-in request received
in this period
1 month PRP 1 month PRP
be achieved.
membership to the
enrolment date
1st 1st

Achieving active membership
• For a trust-based scheme, an employer:
– needs to communicate to the trustees to establish active membership
– needs to understand when active membership starts (eg with NEST it is
on the 3rd working day after processing the enrolment request).
• For a contract-based scheme an employer:
– will have to make arrangements with the pension scheme provider, so
that the jobholder is given the terms and conditions of the contract
– will need to know when the pension provider does this.
• In both instances, there will be a process to follow and, once understood,
these timings can be factored into your timelines.

Example timeline 1 (for 1 April 2014 staging date)
Action/Communication Deadline
Assess any requests to opt in during first pay reference
period (1 April to 30 April)
Based on qualifying earnings paid in that pay reference period
(eg based on earnings on 30 April payday)
Issue postponement notices (eg general notice A) to
all existing workers
Six weeks from the day after the staging date: on or before
midnight Tuesday 13 May
Issue postponement notices (general notice A or B) to all new
joiners after staging
Six weeks from the day after their start date (eg before midnight
Wednesday 14 May, for a worker who joins the company on
Wednesday 2 April)

Assess any requests to opt in during first pay reference
period (1 April to 30 April)
Based on qualifying earnings paid in that pay reference period
(eg based on earnings on 30 April payday)
Issue postponement notices (eg general notice A) to
all existing workers
6 weeks from the day after the staging date: on or before
midnight Tuesday 13 May
Issue postponement notices (general notice A or B) to all new
joiners after staging
6 weeks from the day after their start date (eg before midnight
Wed 14 May, for a worker who joins the company on
Wednesday 2 April)
Reassess any jobholders who requested to opt in during 1
April to 30 April to confirm still a jobholder
Based on qualifying earnings paid in next pay reference period
of 1 May to 31 May (eg on 31 May payday)
Enrol jobholders who requested to opt in during
1 April to 30 April:
• Send enrolment information to pension provider
• Send jobholder notification of enrolment
• Ensure active membership achieved:
 issue pension scheme terms and conditions
(if applicable, eg for contract-based schemes)
 issue pension scheme jobholder agreement
(if applicable, eg for some contract-based schemes)
On or before midnight Wednesday 11 June
(with membership effective from Thursday 1 May)
 allow time for any other processes.
A trust-based scheme will have rules on when active
membership becomes effective – this may be a fixed number of
working days after the enrolment information is received by the
pension provider.

Assess workers at end of postponement (last possible day for
staging date postponements is Tuesday 1 July)
Based on qualifying earnings paid in that PRP (eg based on
earnings on 31 July payday)
Issue enrolment notifications 6 weeks from the assessment date (eg before midnight of
Monday 11 Aug, for those assessed Tuesday 1 July).
Enrol eligible jobholders assessed on 1 July:
• Send enrolment information to pension provider
• Send jobholder notification of enrolment
• Ensure active membership achieved:
 issue pension scheme terms and conditions
(if applicable, eg for contract-based schemes)
 issue pension scheme jobholder agreement
(if applicable, eg for some contract-based schemes)
On or before midnight Monday 11 Aug
(with membership effective from Tuesday 1 July)
 allow time for any other processes.
A trust-based scheme will have rules on when active
membership becomes effective – this may be a fixed number of
working days after the enrolment information is received by the
pension provider.
Complete the Declaration of compliance (Registration) 5 months after staging = 1 Sep. The declaration cannot be
completed until all postponements applied at staging have come
to an end, but we strongly suggest that you start the process
early and enter data that is available.

Any questions?

Useful links
• Staging date tool:
www.tpr.gov.uk/employers/tools/staging-date.aspx
• Planning tool:
www.tpr.gov.uk/planner
• Questions to ask when selecting a new scheme provider
www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf
• Letter templates for employers:
www.tpr.gov.uk/employers/letter-templates-for-employers.aspx
• Information about registration:
www.tpr.gov.uk/employers/registration.aspx
www.tpr.gov.uk/docs/automatic-enrolment-online-registration-checklist.pdf
• Our detailed guides for employers and pension professionals:
www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx

Useful links continued…
More information about pensions and automatic enrolment:
• The Association of British Insurers:
www.abi.org.uk/pensionproviders
• The National Association of Pension Funds:
www.napf.co.uk
• National Employment Savings Trust:
www.nestpensions.org.uk
• Independent Financial Advisers:
www.unbiased.co.uk
• The Pensions Regulator:
www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf

Useful links continued…
Other webinars:
• Automatic enrolment – dispelling the myths
www.tpr.gov.uk/press/webinar-automatic-enrolment-dispelling-the-myths.aspx
• Identifying your workforce and calculating minimum contribution levels
www.tpr.gov.uk/press/webinar-identifying-workforce-calculating-minimum-
contribution.aspx
• Implementing automatic enrolment systems and pension schemes
www.tpr.gov.uk/press/webinar-implementing-automatic-enrolment-systems-
schemes.aspx

We would really appreciate your feedback on this webinar. Please
click on the link below to complete.
https://registration.livegroup.co.uk/ae_areyouready/engage/
Feedback

We are here to help!
Contact us at:
www.tpr.gov.uk/contact-us.aspx
Subscribe to our news by email:
www.tpr.gov.uk/subscribe.aspx
Connect with us on LinkedIn:
www.linkedin.com/groups?gid=2675456
Follow us on Twitter:
https://twitter.com/TPRgovuk
Thank you
The information we provide is for guidance only and should not
be taken as a definitive interpretation of the law.

• Useful links
• Glossary of key terms
• Summary of deadlines
• Use of postponement
• More opt in examples
Supplementary slides

Summary of deadlines (for deadlines ending from 1 April 2014)
Letter to existing qualifying pension
scheme members at staging
2 months after staging
Letter to workers who are not already in a qualifying pension
scheme at staging
6 weeks after staging
Joining window, enrolment notifications
and transitional period notices
6 weeks from the assessment date (eg before midnight of
Monday 12 May, if assessed Tuesday 1 April).
Opt-out window 1 month - from the latest of when:
• the enrolment notification is issued, and
• active membership is achieved.
Postponement notices 6 weeks from the day after the assessment date
(eg before midnight Tuesday 13 May, if assessed on Tuesday 1
April).
Complete registration after staging 5 months after staging
Complete registration after re-enrolment 2 months after re-enrolment
Normal contribution payments to scheme provider 22nd day of the month following the month of deduction (19th day
for non-electronic payments).
New member contribution payments to scheme provider (for
all deductions made in first 3 months of membership)
22nd day (for electronic payments) of the first month, following a
three month period starting the day active membership is
effective (19th day for non-electronic payments) eg enrolments 2
January to 1 February = e-payment deadline is 22 May.

Use of postponement
Employers have said they have used postponement to:
• Align the assessment date of new joiners starting at different dates
• Smooth the process in respect of:
– workers with unusual spikes in earnings,
– short-term workers who are expected to only work a month or two, and
– workers who trigger automatic enrolment just before ceasing employment.
• Align automatic enrolment with existing payroll processes to:
– avoid a part period contribution (eg when people are turning 22), and
– maximise length of the opt out period that falls before payroll cut-off.
• Allow time for a worker to setup salary sacrifice for pension contributions

Opt Ins – one week pay reference period
6 weeks
Joining window
membership to the
enrolment date
Staging date
Earliest opt-in enrolment date
If opt-in request is
received in this period
be achieved.
1 week pay
periods

Scenario B
Assessment
date on 1st
day of month
Yes
UK worker
aged 22 to SPA?
No statutory
duty to enrol
No
5th
C
6th
R P0 C
6th
R C
6th
R P2
5th5th
Yes
Total QE
paid in PRP
> earnings
trigger ?
No
Staging dateMonthly pay
reference period (PRP)
Key:
C – Payroll cutoff
R – Payroll run
P – Payday
Opt-out window
could start
P1
Feb March April
Issue letter to worker
and set up active
membership
Automatic enrolment
triggered
28th 28th
28th
1st
Staging with a tax month PRP
• Pay reference period runs from 6th
day to 5th day of each month
• Assessment date on 1 April (ie the
staging date) is after the March
payday P1 on 28 March
• Total qualifying earnings (in PRP 6
March to 5 April) assessed using
old tax year earnings thresholds.
If the worker needs to be
automatically enrolled (from 1 April):
• First deduction needs to made
in the next payday P2 on 28 April
• Opt-out window could start
before first deduction taken
• Contribution based on scheme rules
(eg for a legal min scheme, based on
100% of April’s qualifying earnings).

Opt Ins – one tax month pay reference period
6 weeks
Joining window
Staging date
Earliest opt-in enrolment date
If opt-in request is received in
this period (1st to 5th inclusive,
if not past payroll cutoff)
1 month PRP 1 month PRP
be achieved.
membership to the
enrolment date
1st 6th
5th 6th 5th 6th

Glossary

Automatic enrolment terms
• Automatic enrolment scheme – a qualifying pension scheme which can
be used for automatic enrolment
• Eligible jobholder (EJH) – a worker who must be automatically enrolled
into an automatic enrolment scheme
• Entitled worker (EW) – a worker who is entitled to join a pension scheme
• Jobholder – an eligible jobholder or non-eligible jobholder
• Non-eligible jobholder (NEJ) – a worker who has the right to opt in to an
automatic enrolment scheme
• Office holder – a person who has been appointed to a position
by a company or organisation, but doesn’t have a contract or receive
regular payment
• Personal services worker – an individual who has contracted to perform
work or services personally (this is sometimes referred to
as a ‘contract of services’)

Automatic enrolment terms continued…
• Postponement – an optional mechanism to delay the automatic enrolment
duties for workers
• Qualifying earnings – the earnings which determine a worker’s category
(EJH, NEJ or EW) and (as a band of earnings) may be used as the definition
of pensionable earnings
• Qualifying scheme – a pension scheme which meets the minimum criteria
and so existing members who are eligible jobholders will not need to be
automatic enrolled
• Staging date – the start date of an employer’s automatic enrolment duties
• Worker – an individual who works under a contract of employment (or a
personal services worker)

Other terms
• Active member – a person who is currently a member of the pension
scheme (and would normally be contributing to the scheme)
• Defined benefit (DB) – a pension scheme where the benefits payable on
retirement are known (eg ‘final salary’, where the retirement income is
based on the member’s salary)
• Defined contribution (DC) – a pension scheme where the contributions
are known, but the benefits are not guaranteed and are likely to depend on
the fund value at retirement
• Deferred member – a person who is no longer an active member of the
pension scheme, but has accrued some benefits (payable on retirement or
could be transferred)

Other terms continued…
• Hybrid – a pension scheme with a mixture of DB and DC components
• PAYE (Pay As You Earn) – HM Revenue & Customs’ (HMRC)
tax payment mechanism
• PAYE scheme – HMRC’s record for an employer who employs a worker
or workers for whom PAYE taxable income is payable
• PAYE scheme reference number – a number issued by HMRC to identify
each employer’s PAYE scheme(s)
• Pensionable earnings – the earnings on which pension contributions
are due

Auto Enrolment: Are You Ready?

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