This document provides an overview of automatic enrolment duties for employers in the UK. It discusses the timeline employers have been required to comply with automatic enrolment and the penalties for noncompliance. It also reviews the assessment process for determining which employees must be enrolled, the minimum contribution requirements, and options for managing ongoing compliance. Finally, it provides a brief overview of recent pension changes including pension freedoms introduced in 2015 and updates from the 2016 budget.

1. Sponsor:
PM1: MEETING YOUR
PENSION AUTOMATIC
ENROLMENT DUTIES AND
PENSIONS CHANGES
ANDY CAMPBELL CFP
EMPLOYEE BENEFITS
MANAGER, LUCAS FETTES

2. Automatic Enrolment

3. Automatic Enrolment (AE)
Background and
the story so far
Overview of AE
duties and key
employer
decisions
AE in practice
and managing
employer duties
2016 Pension
update and Q&A

4. Introduction and Background
Flat rate state
pension
Increased state
retirement age
Diminishing final
salary scheme
Removal of
default
Retirement Age
State Pension Time bomb

5. The story so far
Period Ending Completed declaration
of compliance
Workers enrolled
March 2013 84 308,000
March 2014 10,817 3,200,000
March 2015 45,820 5,200,000
March 2016 110,103 6,100,000

6. Remaining staging date timetable
Employer Size Quarter (Financial Year) Forecast Volumes
Small & micro employers
Q1 2016/2017 101,000
Q2 2016/2017 133,000
Q3 2016/2017 168,000
Q4 2016/2017 215,000
New employers
Q1 2017/2018 178,000
Q2 2017/2018 137,000
Q3 2017/2018 131,000
Q4 2017/2018 87,000

7. Failure to comply
Initial Fixed Penalty £400
Number of people in PAYE Scheme Daily accrual rate
1 – 4 £50
5 – 49 £500
50 – 249 £2,500
250 – 499 £5,000
500 or more £10,000

8. Notices served
Power Description Number in
Period
Number to
March 2016
Fixed penalty
notice
A fixed Penalty Notice under section 40 of
the Pensions Act 2008 of £400 for failure to
comply with a statutory notice or some
specific employer duties
806 2,234
Escalating penalty
notice
An escalating penalty under section 41 of
the Pensions Act 2008 of between £50 and
£10,000 per day (depending on size) for
failure to comply with a statutory notice
96 127

9. Planning ahead of your staging date
• Check existing arrangements
• Identify cost impact
• Decide upon your AE scheme rules
• Identify if you need to establish a new workplace pension scheme
• Decide if you will undertake a market review
• Implement the scheme
• Ensure you have supported processes in place to manage AE
compliance
• Communicate with staff

10. Worker assessments
Staff type Age band Earnings Enrolment Duty
Employer
Contributions
Eligible
jobholders
22 – SPA*
£10,000+
Must be
automatically
enrolled
Yes
Non-eligible
jobholders
16 – 21 or
SPA – 74 £10,000+
Have a right to opt in
Yes
16 – 74 Above £5,824 but
below £10,000
Entitled workers 16 - 74 Up to £5,824 Have a right to join No
*SPA – State Pension Age

11. Minimum contribution requirements
Employer Pays Employee Pays* Total
Up to 5th April 2018 1% 1% 2%
From 6th April 2018 to 5th April 2019 2% 3% 5%
From 6th April 2019 3% 5% 8%
Based on Qualifying Earnings (total earnings between £5,824 and £43,000)
I*inclusive of tax relief

12. Alternative contribution options
• Pensionable earnings:
- Set 1 basic pay
- Set 2 basic pay where it represents 85% of total pay
- Set 3 total pay
Employer Pays Employee Pays Total
Set 1 4% 5% 9%
Set 2 3% 5% 8%
Set 3 3% 4% 7%

13. Communications to workers
• Optional pre–staging date announcement
• Statutory postponement notice if applicable
• Statutory assessment outcome communications
• Enrolment pack from pension supplier with opt-out instructions
Additional communications could include:
- Staff Presentations
- Webinars
- Posters
- Payslip Inserts

14. AE compliance in practice
• Assessments will need to be conducted each pay period
• Recorded and evidenced
• Correct contributions deducted
• Pension reports sent to pension supplier
• Statutory communications sent to workers
• Options for managing compliance include:
- Payroll
- Pension Supplier
- 3rd Party

15. Ongoing employer duties
• Completion of your declaration of compliance
• Agreeing a new joiner process
• Managing opt-in and opt-out requests
Communications will need to be issued when:
- New employees join the payroll
- Employees on the payroll turn 22 and become eligible
- Employees whose earnings increase due to a pay spike

16. Future governance and oversight
• Annual review of the pension scheme
• Re-enrolment
• Triennial Declaration of Compliance

17. Pension Changes

18. 2016 pension update
Pension
Freedoms and
Choice
2015 Autumn
Statement
2016 Budget Q & A

19. Pension Freedom and Choice
• Introduced on 6th April 2015
• Full access to pension funds
• £4.35bn paid out in cash lump sum payments by quarter of a million
people between April 2015 and March 2016
• Information and guidance provided by Pension Wise

20. Pension Freedom and choice
Take up to 25% of
your pension savings
tax free and….
Withdraw your cash in stages, with 25% of each withdrawal tax free
and the remaining 75% taxed as if it were income
OR
convert some or all of the rest as
a taxable lump sum
convert some or all of the rest
into taxable income

21. 2015 Autumn Statement
• Full state pension increases to £119.30 a week
• AE phasing contribution dates to be delayed for six months to bring into
line with tax years
• High earners tapered annual allowance
• Lifetime allowance to reduce to £1m

22. 2016 Budget
• Hold on reform of pension tax relief
• No changes to salary exchange arrangements
• Pension information and advice
• Pension Dashboard

23. Lifetime ISA
• Starts 6th April 2017
• Tax / exempt / exempt approach
• 25% Government bonus, equivalent to basic rate tax relief
• Only for adults under 40
• Up to £4,000 a year (18-50)
• Contributions count towards ISA limit
• Funds can be access after 12 months for first time property purchase

24. Summary
Background and
the story so far
Overview of
employer duties
and AE in
practice
Pension
Freedoms and
impact of Budget
Questions &
Answers

25. Where can you get more information
Lucas Fettes auto-enrolment helpline – 0345 357 8910
http://www.easyasae.co.uk

26. Questions and Answers

27. Important Notes
This presentation has been prepared based on our current understanding of
UK taxation, Law and HMRC Practice.
Lucas Fettes & Partners (Financial Services) Limited is an Independent
Financial Adviser authorised and regulated by the Financial Conduct Authority
(FCA) FCA no. 146279.
Please note, the value of investments can fall as well as rise in value therefore
it may not always be possible to receive back the full amount invested. Past
performance is not necessarily a guide to future returns and investments of
this nature should be considered as medium to long term