This document provides an overview of automatic enrolment and guidance for employers on getting started with the process. It explains that employers have various legal duties under automatic enrolment legislation including automatically enrolling eligible employees into a qualifying pension scheme. The document outlines the initial steps employers should take which include knowing their staging date, nominating a contact, developing an action plan, examining their workforce, choosing a pension, and checking systems. It emphasizes the importance of planning well in advance of an employer's staging date. Finally, it provides some useful links for employers to access additional guidance and resources.

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Part 2: Getting started
Neil Esslemont
Head of Industry liaison team
Rebecca Woodley
Industry liaison team
February 2014
An introduction to
automatic enrolment
The information we provide is for guidance only and should
not be taken as a definitive interpretation of the law.

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Scope
Getting started
• This is the second part of the ‘Introduction to automatic enrolment’ module.
• We recommend that you view part 1 of the Introduction to automatic
enrolment: employer duties before you view this module.
• You may also like to view our modules on Staging dates and Who is your
worker?
• This module will:
– get you started in your planning process, and
– explain the terminology used.

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Contents
• What do employers need to do?
• Review of the module.
• What next?

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An introduction to automatic enrolment
Getting started

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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 registration with The Pensions Regulator
 keep records, and
 maintain contributions
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

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What to do before your staging date
• Know your staging date
• Nominate a contact
• Develop an action plan
• Examine your workforce
• Choose a pension
• Check suitability of payroll and IT systems
• Communicate to staff
These may need
to be done at the
same time or in
any order

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Know your staging date
• Your staging date is not based on current worker numbers.
• It is based on the size of the largest PAYE scheme the employer
was using as of 1 April 2012
– any subsequent changes in PAYE size or usage have no effect
on the staging date.
• You should use our staging date tool (see the Useful links section):
– You will need all the PAYE references used by the employer
as of 1 April 2012.
– Enter all PAYEs and the earliest date applies to that employer.

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Nominate a contact
• Nominating a contact is not the same as registration.
• Make sure the right person receives our letters and emails (eg the person
in the employer organisation responsible for the project).
• You can enter the nominee’s contact details at:
https://forms.tpr.gov.uk/workplacepensionsreform/nominate.aspx
• If you nominate a colleague, please tell them.
• You will need the letter code found in the top left of the letter from us.
• If you don’t have the letter or can’t find the code, please contact us:
www.tpr.gov.uk/contact-us.aspx

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

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Examine your workforce - contracts
You will need to know which workers may be affected by automatic enrolment:
• Workers under a contract of employment (employees) are typically subject to
the automatic enrolment legislation.
• Contractors or agency provided staff could also be subject to the automatic
enrolment legislation:
– Individuals who contract* to perform work or services personally could be
considered workers and you will need to check...
 if the individual is paid directly by you (eg on your payroll or invoices
payable) or do you pay another company for this work?
 and, if you do pay the individual, then you will need to look at this in
more detail* to decide if they are workers and, if so, whose workers
they are for the purposes of automatic enrolment.
* See our module ‘Who is a worker?’ for further information

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Examine your workforce - ordinarily working in the UK
Only workers who work (or ordinarily work) in the UK are subject to the automatic
enrolment legislation, unless they have been seconded overseas.
• Do you have UK staff who have been seconded overseas?
–if so, they are likely to be considered as ordinarily working in
the UK and they will need to be assessed.*
• Do you have any staff normally based overseas who are seconded
into the UK?
–if so, they may be considered as not ordinarily working in
the UK and be excluded.
*See our module ‘Who is a worker?’ for further information

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Existing pension schemes
• If you have an existing pension scheme you will need to consider:
• Are there any existing active members (eg members currently contributing)?
• Could any of the existing members be (or become) eligible jobholders?
• Is it a qualifying scheme and does it satisfy the minimum criteria*?
– If it is a contract based scheme, it is likely to need “jobholder agreements” for
all active members (an agreement by the member to pay the difference between the
employer contributions and the legal minimum total contribution)
– If it is not a qualifying scheme, it may be possible to change the scheme
rules – but your existing scheme provider may not allow this.
• Do you want to use this scheme to automatically enrol your workers?
– Your scheme provider may not allow it be made an automatic enrolment
scheme (eg scheme provider would need to issue Opt out notices).
* See: www.tpr.gov.uk/employers/explaining-qualifying-schemes.aspx

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Choosing a new pension
If you need or want to use a new scheme for automatic enrolment:
• How will you choose the scheme provider*, scheme and default fund? See:
www.tpr.gov.uk/docs/selecting-a-good-automatic-enrolment-scheme.pdf
• Some scheme providers may not wish to offer you a pension scheme.
• Providers may be at full capacity – or have long waiting times.
•NEST are obliged to offer you a pension scheme
... but don’t leave it too late.
* See our ‘Useful links’ slide

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Check suitability of payroll and IT systems
In practice, employers will almost certainly need some software automation.
•Do you intend to use your payroll 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?
• Or, are you going to get another supplier to carry out the assessments (eg
pension scheme provider or other non-payroll provider)?
•How will you automate staff communications (eg a ‘mail merge’ software tool)?
•Can your IT/computer systems cope if you need to run additional software?
•Where is the data stored (eg on an integrated HR/payroll system or separately)?
•How will the 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 need to ask.

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Mandatory communications to staff
There are a number of occasions where an employer is required by law to
communicate with their workers:
•The information will need to be provided directly – by letter, email
(or other direct means).
•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

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Additional communications to staff
Many employers will want to communicate more than the statutory minimum:
• Are your staff aware of any changes to existing pension 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).

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Develop an action plan
To comply with the law, employers are likely to have to consider:
• HR issues: eg employment and non-employee contracts, employee data accuracy,
benefits policies, new joiner processes, staff communications.
• Pensions issues: eg impact on existing pensions schemes and their members,
whether to use an existing scheme or a new pension for automatic enrolment.
• Payroll issues: eg pay cycles, payroll cut-offs, payroll data accuracy, refunds,
contribution calculations, processes which span tax years.
• Information technology (IT) issues: eg computer systems, reliability and networking
issues, data standards to allow different software/systems to work together.
• Procurement issues: eg any plans to buy new IT systems/software or pensions
schemes or upgrade/changes to existing systems/software.
• Financial issues: eg forecasting and budgeting for any impact on costs.
 Employers should make sure they involve the right people in their
own organisation and in all their suppliers (or potential suppliers).

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Emerging lessons
Employers who have staged already have said that they have:
• Changed employment terms and conditions to fit their automatic enrolment
processes and overall benefits policy.
• Brought forward the staging dates of their smaller companies to the same
date.
• Had to data cleanse their staff data to check it is up to date before staging.
• Checked the quality and governance of the automatic enrolment scheme’s
default fund.
• Tailored staff communications to their company’s needs and used multiple
media.

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Other lessons learnt
Some employers have:
• used their existing pension scheme provider for automatic enrolment, or
• looked for a new scheme provider with automatic enrolment project
experience.
All employers asked said:
• Planning was key.
• Allow 12 months to understand the legislation and plan your strategy.
• You must have a test payroll cycle period before ‘going live’.

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Question 1: Staging dates are based on current employee numbers?
True or false?
Answer: False. A staging date is based on the size of the largest PAYE
scheme the employer was using as of 1 April 2012.
Question 2: How can you find out your staging date?
Answer: Use our staging date tool. Enter all your PAYEs and the earliest
date will apply. Or, if within 12 months of staging, refer to our letter
confirming the date.
Questions and answers

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Question 3: Nominating a contact is the same as registration?
True or false?
Answer: False. They are two distinct processes. (See our planning tool)
Question 4: An existing pension can always be used for automatic enrolment?
True or false?
Answer: False. Although an existing scheme may meet the requirements to
be used for automatic enrolment it will not always be the case.
The employer should check with the pension provider.
Questions and answers continued…

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What next?

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Know
your staging
date
Who is a
worker?
Reviewing
your pension
schemes
Employee
safeguards
Assessment
and automatic
enrolment
Communicate
to your workers
Postponement
and
transitional
period
Joining/
opting In
Record-
keeping/
Contribute
to your
pensions
Opting
out
Contractual
versus
Statutory
enrolment
Declaration of
compliance
(register)
Now Between now and staging At staging and beyond
Automatic enrolment
Introduction
to automatic
enrolment
Part 1:
Employer
duties
Part 2:
Getting
started

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Useful links
• Modules: Introduction to automatic enrolment, Staging dates and Who is a worker?
www.tpr.gov.uk/help-clients
• Staging date tool:
www.tpr.gov.uk/employers/tools/staging-date.aspx
• Planning tool:
www.tpr.gov.uk/planner
• 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

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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

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We’d appreciate your feedback
on this presentation
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Thank you
The information we provide is for guidance only and should
not be taken as a definitive interpretation of the law.

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Glossary

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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’)

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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)

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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)

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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