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Similar to ProAktive's approach to Auto Enrolment (pensions).
ProAktive's approach to Auto Enrolment (pensions).
- 1. Automatic Enrolment Creating aroad map for your business Supporting you every step of the way John Carter DipPFS
- 2. Roadmap •Background – WhyAuto Enrolment •Employer Duties •Contribution options •Admin Duties •Middleware •Staff Communication
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- 4. People are livinglonger Historic and projected life expectancy at age 65 UK (years) Men Women 18 14 1981 23.7 21 2010 Source: Office for National Statistics, Pension Trends Chapter 2, 16 February 2012. 28.3 25.9 2051
- 5. It’s unaffordable Total projectedexpenditure on state pensions and related benefits, 2011/11 to 2050/51 £billions, 2011/12 prices 250 196 142 84 92 97 2010/11 2015/16 2020/21 2030/31 Source: Office for National Statistics, Pension Trends Chapter 5, 27 October 2011. 2040/41 2050/51
- 6. Inflated Retirement Expectations •Basic State Pension is currently? £110.15 per week (£5727.80 pa) • For a £20K Personal Pension income (Start Saving at 40)? £799 per month * assuming 7% growth and current annuity rates
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- 8. Employer Duties • Implementan Auto Enrolment compliant pension scheme • By the staging date set by the DWP • Maintain the scheme in accordance with applicable legislation
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- 11. Assessing worker type Thedifferent types of worker Age (inclusive) 22 – SPA 16 - 21 Earnings SPA - 74 Under lower qualifying earnings threshold £5,668 or less Entitled worker – can join More than £5,668 up to £9,440 Non-eligible jobholder – can opt-in Over automatic enrolment earnings trigger - £9,440 (up to £41,451 for band earnings) Non-eligible jobholder – can opt in Eligible jobholder AUTOMATIC ENROLMENT * Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012 Non-eligible jobholder – can opt in
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- 13. When will ithappen? Voluntary start “Test tranche” <30 250 or more July 2012 Oct 2012 249 to 50 April 2014 Feb 2014 49 to 30 April 2015 Aug 2015 June 2015 <30 and no PAYE Oct 2015 Jan 2016 New employers Apr 2012 to Sep 2017 May 2017 Apr 2017 Feb 2018
- 14. It’s OK, Ican wait until my staging date! Capacity Crunch • Provider ability to respond? • Availability of advice? • Timeframe for set-up • Budget Planning?
- 15. Staging profile to May2015 Source: payrollworld.com
- 16. And in realnumbers …….. Source: TPR / PW
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- 18. Contribution options? DefinedContribution – will be phased in to: 8% ‘Banded Earnings’ total 3% ‘Banded Earnings’ employer minimum Jobholder can be required to make up the difference ‘Qualifying Earnings’ Between £5,668 - £41,450* Includes overtime, SSP, SMP etc * Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012
- 19. Band Earnings Earningsthresholds: Earnings £ £41,4501 Contributions paid £9,4401 £5,6681 Not auto-enrolled 0 Source: Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2012
- 20. Phasing Transitional Duration Employee Total min contribution Period Employer min Pays contribution Phase1 Employer's staging date to 30 September 2017 1% 1% 2% Phase 2 1 October 2017 to 30th September 2018 2% 3% 5% 1 October 2018 onwards On-going 3% 5% This is for the default “banded earnings” certification. Other certifications will vary. Contractual entitlements are not considered in this example. Source: Making automatic enrolment work, Report for the DWP October 2010 8%
- 21. Contribution options 3 additionalcertification options: A minimum of 9% contribution of pensionable pay (including at least 4% employer contribution) A minimum 8% of pensionable pay (3% employer) provided pensionable pay constitutes at least 85% of the total pay bill A minimum 7% contribution of earnings (3% employer), provided that 100% of total pay is pensionable OR • “Qualifying Scheme” - The scheme already meets all of the AE requirements Source: Making automatic enrolment work, Report for the DWP October 2010
- 22. Contribution options • 3acceptable definitions: DEFAULT 1 2 £50,000 3 Total earnings Basic earnings £41,450 <15% Earnings £ >15% Basic earnings 8% 7% 8% 9% £9,440 £5,668 0 1. If the definition of pensionable pay is total earnings then a 7% contribution rate is acceptable 2. If total pensionable earnings equate to at least 85% of the total wage bill, then 8% is acceptable 3. If pensionable earnings are less than 85% of total earnings then a 9% contribution is acceptable
- 23. Salary Exchange/Sacrifice £100 netemployee contribution Pension Exchange Amount Basic Rate £147.06 Employer’s NI Saving £20.29 Total Invested ?????? Pension Exchange Amount Higher Rate £172.41 Employer’s NI Saving £23.79 Total Invested ??????
- 24. Potential Savings couldoffset the costs ………… 30 employees @ £20.29 NI saving per month Monthly Payroll Saving = £608.70 Annual Payroll Saving = £7304.40
- 25. SEGMENTATION Directors Sales People Generic Provider 9%Basic Pay General Staff See Generic Provider (People’s Pension / NEST/Insurer) 8% Banded Earnings Senior Managers GPP 7% Total Pay
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- 27. Admin duties Employers MUST EmployersMUST NOT Auto enrol and re-enrol/deduct payments Register/re-register their scheme Provide information to eligible and noneligible jobholders Discourage membership Give jobholders the opt-out form Encourage opt-outs Provide information to scheme/provider Use ‘Prohibited recruitment conduct’ Process opt outs/make refunds Give advice Keep records Sources: Pensions Act 2008, The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010.
- 28. Or else... Stage 1- Warning Compliance/unpaid contribution notice Fixed penalty - £400 Stage 2 – ‘Wake up call’ Escalating penalty Stage 3 – Persistent offenders Workers 1-4 5-49 50-249 250-499 500+ Sources: Pensions Act 2008, Chapter 2, The Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010. For professional advisers only Penalty per day £50 £500 £2,500 £5,000 £10,000
- 29. 11 Months inand changes already ……….. • Aligning assessment pay reference period with tax periods (RTI?) • Defining pay reference periods for quality assessment • Consistency of contribution payment deadlines for all joiners • Jobholders opting out “before” Auto Enrolment • Clarification of the opt-out notice, and extension of the joining window • Test scheme standard for DB schemes, and quality requirements • Exclusion of certain workers from Auto Enrolment • “Other possible options” for employers with “good” pension schemes
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- 31. Middleware Integrated software tointerface with; • Payroll • HR • Pension provider • Employees Purpose to assess in each payment period eligible employees, notify new auto-enrolment joiners by age, salary, new starters, staff that have opted out and need re-enrolling after 3 years etc.
- 32. Pension New Joiner Data ContributionData Opt Out Indicators Salary Data Middleware Platform HR Deductions Salary Sacrifice New Hires Re-Joiners Scheme Decisions Updates Payroll Opt-Out Re-join Employees Valuations
- 33. MIDDLEWARE CHOICES Option 1 Option2 Option 3 • Generic Package • Bespoke Package • Bespoke Package • Insurer Supplied • Auto Enrolment Middleware • Auto Enrolment Middleware • Staff Intranet • Staff Intranet • Scheme Segmentation • Scheme Segmentation • Full Reporting • Full Reporting • Basic AE Middleware • Online Payslips • Lifestyle Benefits
- 34. RANGE OF SOLUTIONS OPTION1 OPTION 2 OPTION 3 • Bespoke Offering • Bespoke Offering • Generic Offering • Auto Enrolment Integration and Management • Auto Enrolment Integration and Management • Insurer Supplied • Full Employee Benefits Package • Staff Intranet • Online Payslips • Staff Intranet • Lifestyle Benefits • Auto Enrolment Integration and Management • Tied to Insurer and potentially dependent upon segmentation
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- 37. Communication! • Implementers – Payroll/Management/HR/Financeetc • Employees – Surgeries / One to Ones – Member packs – Reviews / Retirement Advice • Insurer/schemes
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- 39. Summary Step 3 –Run Step 1 – Design a Step 2 – Implement the scheme in the the changes solution for your most efficient way effectively business
- 40. Staging Dates 2,000 –2,999 members 1st August 2013 1,250 – 1,999 members 1st September 2013 800 – 1,249 members 1st October 2013 500 – 799 members 1st November 2013 350 – 499 members 1st January 2014 250 – 349 members 1st February 2014 From (inc.) To (inc.) 50 to 249 members 1st April 2014 1st April 2015 Test tranche for less than 30 members 1st June 2015 30th June 2015 30 to 49 members 1st August 2015 1st October 2015 Less than 30 members 1st January 2016 1st April 2017
- 41. Updates and SocialMedia John Carter ProAktive @ProaktivePeggy @ProaktivePeople ProAktive House Sidings Court White Rose Way Doncaster DN4 5NU 01302 341344 John Carter 07725 258283 [email protected] Proaktive is a trading name of Atkinson Smith (Financial Services) Ltd. Authorised and Regulated by the FCA
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