Evolving Reward & Benefits Auto Enrolment – are you ready? Presented by Peter Waller, Chairman Benefex www.cfoevent.com

1. Evolving Reward & Benefits Auto Enrolment – are you ready? Presented by Peter Waller, Chairman

3. BENEFEX BACKGROUND

5. AUTO ENROLMENT

7. Why make pensions compulsory? 13.9M People have no workplace pension provision Source: NAPF

10. 7 Million Employees are not saving enough for retirement Source: DWP

16. WHO?

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

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

19. WHEN?

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

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+

23. WHAT?

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

27. SO WHERE IS EVERYONE ON THIS? INTERACTIVE SESSION

28. WHAT ARE WE SEEING HAPPEN?

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.