Download to read offline
More Related Content
Similar to Auto Enrolment Seminar
Auto Enrolment Seminar
- 1. Preparing for AutoEnrolment Guidance for Accountants and their clients David Wandless Professional Services Trainer Accountants' Division
- 2. Preparing for AutoEnrolment Agenda Welcome & Introduction • An introduction to Workplace Pension Reform • The seven steps to Auto Enrolment • Postponements and on-going reviews • Opt outs and refunds • Review - Triennial Re-Enrolment • Questions & feedback Accountants' Division
- 3. The 7 Steps Accountants'Division
- 4. 7 steps toAuto Enrolment from The Pensions Regulator (TPR) 1 Know your staging date 2 Assess your workforce 3 Review your pension arrangements Accountants' Division Bureau / Accountants Shared Client’s Responsible responsibility responsibility
- 5. Staging profile (volumesof employers) Planning ahead is key. Very large volumes staging from January 2016 Q1 2015/16 peak includes small and micro employers
- 6. 7 steps toAuto Enrolment from The Pensions Regulator (TPR) 1 Know your staging date 2 Assess your workforce 3 Review your pension arrangements 4 Communicate the changes to all your workers 5 Automatically enrol your ‘eligible jobholders’ 6 Register with the Pensions Regulator and keep records 7 Contribute to your workers’ pensions Accountants' Division Bureau / Accountants Shared Client’s Responsible responsibility responsibility
- 7. Point of Contact Itcould be you! Accountants' Division Nominating a Point of Contact is a requirement on TPRs website. https://forms.thepensionsregulator.gov.uk/workplacepensionsreform/nominate.aspx Not everyone realises you can nominate TWO contacts; 1) PRIMARY - Must be the Director / Company representative 2) SECONDARY - In order to ensure that you are in the best place to support your clients it is possible (and advisable) that the second person is whoever is doing the day-to-day processing of Payroll / AE, i.e. YOU!
- 8. Who are myworkers & what will it cost? Accountants' Division
- 9. • People couldbe subject to the automatic enrolment legislation if they are: full or part-time permanent, temporary or casual workers on ‘zero hours’ contracts a contractor (even if considered self employed for tax purposes) agency staff staff seconded overseas, and/or home workers. Which workers may be affected?
- 10. Are they apersonal services worker? • The employer needs to judge whether or not an individual (who is not a director) with a contract to perform work or services personally is undertaking the work as part of their own business. • Does the employer: – have control over an individual’s method of work (eg hours worked)? – provide any employee benefits? – bear all the significant financial risks in carrying out the work (eg the worker is not financially responsible for their faulty work)? – provide what is required for the individual to carry out the work (eg tools)? If most or all of the above are true, then it would be reasonable to consider that they are not undertaking the work as part of their own business – and they are a personal services worker. • The list above is not exhaustive and an employer must take into account all relevant considerations and make a reasonable judgement.
- 11. • The workforceshould be placed into 3 categories to establish which duties you have towards your workers: 1. Eligible jobholders 2. Non-eligible jobholders 3. Entitled workers automatic enrolment may ‘opt in’ to a qualifying pension may join a pension WKR/ER contrib. WKR/ER contrib. WKR contrib. • The next criterion for assigning a category status to your workforce is based on their age and qualifying earnings: How to place your workers into the relevant categories… Accountants' Division Over £10,000 Betw. £5,824 & £10,000 £5,824
- 12. Pay Reference PeriodExamples Pay Reference Period 6th-5th (PRP) Monthly pay £856 (Sally age 23) 6th Pay-date 5th 25th Pay Reference Period Mon - Sun Weekly pay £113 (Paul age 24) Mon Pay-date Sun Fri PRP Lower level of qualifying earnings Earnings trigger for automatic enrolment 1 week £112.00 £192.00 1 month £486.00 £833.00 Sally: is an eligible jobholder and will be auto-enrolled Paul: is a non-eligible jobholder who can opt in Jack: is an entitled worker who can join a scheme Monthly pay £480 (Jack age 21) 6th Pay-date 5th 25th Accountants' Division
- 13. Question : Ifsomeone is a personal services worker, but is not on PAYE, how could an employer deal with this? Answer: It does not matter whether a person is paid through PAYE or not - If they are considered a worker they will need to be assessed and automatically enrolled if eligible. - An employer could continue to pay them directly, without deducting tax and national insurance, but make a deduction for their pension contributions as and when appropriate. Questions and answers
- 14. • The minimumtotal contributions are being phased in over the next 5 years • The minimum legal requirement rates by law are as follows: How Much? Contribute to your workers’ pensions • The worker will receive tax relief on their contribution • Employers should pay the contributions to the pension scheme by the 19th/22nd of the following month Dates Worker Contrib. Difference * Min. Employer Contribution Minimum Total Contribution From Staging date to 30th Sep 2017 1% 1% 2% From 1st Oct 2017 3% 2% 5% From 1st Oct 2018 5% 3% 8% * If the employer contribution is sufficient to make up the minimum total contribution, then no worker contribution will be required. Accountants' Division
- 15. Although MOST companieswill use the table on the previous slide, there are alternative ways of implementing AE as follows; How Much? Contribute to your workers’ pensions Accountants' Division Pensionable Pay Worker Contrib. Difference Min. Employer Contribution Minimum Total Contribution Total Qualifying Earnings 1% 3% 5% 1% 2% 3% 2% 5% 8% Pensionable Pay at least 85% of Total 1% 3% 5% 1% 2% 3% 2% 5% 8% Basic Pay* 1% 3% 5% 2% 3% 4% 3% 6% 9% * Calculation starts from £1 of earnings
- 16. Example Calculations under AE Monthlypay £1800 (Peter age 23) PRP Lower level of qualifying earnings Earnings trigger for automatic enrolment Upper level of qualifying earnings 1 month £486.00 £833.00 £3,532.00 £1800 – 486 = £1,314 pensionable pay Dates Worker Contrib. Difference Min. Employer Contribution Minimum Total Contribution From 1st Oct 2018 5% 3% 8% 5% WKR £65.70 (Peter = £52.56 / Tax relief = £13.14) 3% ER £39.42 Total Contribution 8% £105.12 Accountants' Division
- 17. Example Another example (capped) Monthlypay £5000 (Julie age 43) PRP Lower level of qualifying earnings Earnings trigger for automatic enrolment Upper level of qualifying earnings 1 month £486.00 £833.00 £3,532.00 £3532-£486 pensionable pay = £3,046 Dates Worker Contrib. Difference Min. Employer Contribution Minimum Total Contribution From 1st Oct 2018 5% 3% 8% 5% WKR £152.30 (Julie = £121.84 / Tax relief = £30.46) 3% ER £ 91.38 Total Contribution 8% £243.68 Accountants' Division
- 18. • Workers getcategorised based on Age / Qualifying Earnings & whether they are a UK worker • Qualifying Earnings are usually all Ni-able earnings, but there are some exceptions • Using the Qualifying Earnings model, pensions are calculated on Qualifying Earnings between the Lower Threshold and the Upper Threshold, not on all earnings • It is a legal requirement to send the right letter to the right person at the right time and the letters must match very specific requirements Key things to remember (2) In brief… Accountants' Division
- 19.
- 20. • Not allexisting pension schemes will be suitable for AE • Anyone on an existing pension scheme can stay on that as long as contributions at least meet minimum AE requirements • Some companies may need / want more than one pension scheme • Usually you need to perform the initial assessment earlier than expected (because 1st of the month is in the prior Tax Period) Key things to remember (4) In brief… Accountants' Division
- 21. • Postponement ispossible BUT it adds a level of complication and additional administration. Employers MUST NOT use postponement because they are not ready • Any employee who has been postponed can ask for this to be reversed and the EMPLOYEE’s Decision is final • Postponements can be used; At Staging For new starters Where an employee has had a ‘temporary’ Pay Spike Where an employee turns 22 so becomes Auto-Enrolable • Every time you postpone you MUST tell the worker this has been done (by letter) Key things to remember (5) In brief… Accountants' Division
- 22. Postponement Example 1 –Pay Spikes Assess Auto-enrolment Trigger £833 Postponement Postponement Re-Assess Erica – 30 years old – PRP from 6th to 5th of the next month Accountants' Division £850 £840 £830 £820 £810 £800 £790 £780
- 23. When to makethe assessment Tax Period including Staging date Worker’s starting date 22nd birthday 16th birthday Opt-in or joining notice Deferral dates PRP Accountants' Division
- 24. • Anyone whois Auto Enrolled can chose to Opt Out • If they Opt Out in the first month (after receiving notification they have been enrolled) they can get a refund of any contributions already made • Non-Eligible Job Holders can choose to Opt In (and then the employer needs to contribute also) • Entitled Workers can choose to join a pension but the employer doesn’t have to contribute • Every 3 years anyone who has Opted Out more than 12 months ago needs to be re-enrolled Key things to remember (6) In brief… Accountants' Division
- 25. • As itstands at present, SINGLE directorships where there are no other directors / workers do NOT need to do Automatic Enrolment • It is advisable however to inform TPR that they will not be complying • Multiple Directorships (even Husband/Wife teams) depends on what CONTRACTS the directors hold. If they do not have any written contracts AND there are no other workers they are also exempt. • However, if there are any other workers, or is any of the ‘directors’ have a written contract (as an employee or worker would have) then ALL in the business are to be included and assessed as any other business. Directors Accountants' Division
- 26.
- 27. It isn’t optional! TheConsequences There are consequences if an employer fails to comply with their automatic enrolment duties. It is a criminal offence for an employer not to: • set up in first place • auto-enrol all Eligible workers • re-enrol every 3 years! It is also a criminal offence for an employer to: • Force employees to opt out or to even suggest it would be viewed positively Accountants' Division
- 28. It isn’t optional! TheConsequences Penalties TPR can compel employers to comply with their auto-enrolment duties and The Regulator can impose a penalties on employers who fail to comply. Update Quarter 1 this year; Stage 1 – Approx. 5000 compliance notices (warnings) were issued Stage 2 - In the last first 9 months of this year 400 firms were hit with a £400 fine Stage 3 - In some cases, TPR can impose a daily penalty of between £50 and £10,000 depending on the number of employees affected. So far they have issued 5 fines, which were at the level of £500 per day… Accountants' Division
- 29.