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Navigating the Automatic Enrolment Challenge: Key Insights for Employers

Join Neil Mutton, Director at Q&A People Matter, as he explores the complexities of Automatic Enrolment for employers. This session will cover current statistics, pending demand, planning for success, pension scheme options, compliance, and record-keeping solutions. Gain insights into the responsibilities employers have under new legislation, including automatic enrolment of eligible jobholders, record maintenance, and communication strategies. Learn how to effectively guide clients through the auto-enrolment landscape and ensure compliance while enhancing employee benefits.

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Navigating the Automatic Enrolment Challenge: Key Insights for Employers

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  1. 15.10 – 15.35 The Automatic Enrolment Challenge • Neil Mutton • Director, Q & A People Matter • www.ifa.org.uk

  2. The Automatic Enrolment Challenge • Neil Mutton • Director • Q&A People Matter Ltd www.qnapm.com

  3. - Current statistics- Whatis the pending demand ?- Planning for success- Pension Scheme options - Complianceand Record Keeping solutions- Employer types emerging What will be answered in this session

  4. Who are Q&A People Matter • Employee Benefits • HR services • Payroll • Financial Advice & Education • 40 staff, London, Dubai, Isle of Man

  5. Accountants are key to your Clients success • First port of call for most things • Probably run payroll for them • Understand their business • Help them budget • Take the pain away … • They will need guidance !

  6. Auto Enrolment is a complex Project Plan ! • Employee Benefits • Finance / Budgeting • HR / Contracts, Handbooks • Payroll / Complexity & Process • Communication & Education • Staff Reward and Motivation • Timelines , Milestones, Deliverables

  7. Staging profile (volumes of employers) Source: The Pension Regulator, Feb 2014

  8. In Summary Automatic Enrolmentlegislation give 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 • Facilitate 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 • Maintain contributions Employers : • Must notinduce 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

  9. Do you know your clients situation ? • Staging Date • Business Complexity • Time to go to reach staging date • Budget • Pre – staging date activities • For ongoing Pension contributions • How will they communicate to their staff ? • Who will do all the work ? • How will you offer guidance ? • Work with experts ? • DIY ? • Key decisions cannot be left until the lastminute

  10. Phasing the minimum contributions: Now - 2018 2% 5% 8%+ Defined contribution 1% employee contribution 3% employee contribution 5% employee contribution 2% employer contribution Defined contribution 1% employer contribution 3% employer contribution Staging period October 2012 October 2017 October 2018

  11. Cost / Budget elements • Cost of designing/planning your Employers scheme • Cost of implementing:- • Pension scheme(s) / contributions • Communication to / Educating staff • Cost of Running the scheme • Pension contributions • Compliance & Administration

  12. 8 Steps to Auto-enrolment:

  13. Employer types emerging • Sophisticated Employers • Existing scheme / benefits • Business complexity • Staff Hierarchy in place • 6m + to go before staging date • Review existing situation • Willing to consider ‘the best’ • Undertake full review • More advice • Longer implementation • “Take The Pain Away “ Employers • No scheme in place • No budget in place • Left things late • staging date looming – planning? • Low business complexity • ‘Vanilla’ solution • Less advice • Shorter implementation

  14. Employee Benefits Strategy & Budget SIPP ? Personal Pension ? Same scheme for everyone ? Same % contribution for everyone ?

  15. Workforce assessment: “Qualifying Earnings basis” 2014/15 tax year £41,865 £36,093 £10,000 .. The trigger for Auto-enrolment £5,772

  16. Assessing your workforce • Eligible Jobholders • Aged between 22 and State Pension Age • Have ‘qualifying earnings’ in the Pay Reference Period

  17. Thresholds v Pay Reference Periods (PRP) 2014-15 †For other PRP durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00) or number of months by the monthly amount (eg £833.00) etc - or pro-rata if not an exact multiple of any of the above. N.B. The Secretary of State will review these figures each tax year.

  18. Assessing your workforce • Non-Eligible Jobholders • Can choose to ‘opt-in’ • Employers must then enrol them and make contributions

  19. Assessing your workforce • Entitled • Age 16 – 74 • Earning < £5,772 • The employer does not have to make contributions for them • Does not have to be the scheme approved for AE

  20. Can Employers Postpone ? • Postponement suspends the duty of automatic enrolment and the need to assess. • Can be from 1 day up to maximum of 3 months - and can vary by individual. • The employer must notify any postponed worker within 6 weeks. • The worker has the right to Opt In or Join during postponement. • So the pension scheme still has to be set up on the staging date !

  21. Which pension scheme provider is best ?Does it matter ?

  22. HR considerations • Recruitment conduct • Probationary Periods • Employment contracts • Offer letters • Policies / deduction of wages clauses … • Data protection (sending data to 3rd party pension providers)

  23. How & when to communicate to workers • Communications must be direct (e.g. letter, e-mail, payslip, HR web-portal). • At staging, need to communicate to all workers, even scheme members. • Need to inform of rights the first time† a worker becomes a particular category

  24. Getting it wrong …. & ….Compliance & Record Keeping

  25. tPR: Powers & Penalties Escalating penalty Workers Penalty per day 1-4 £50 5-49 £500 50-249 £2,500 250-499 £5,000 500+ £10,000 Persistent/Deliberate Offenders Fixed penalty £400 Prohibited recruitment conduct Workers Fixed penalty 1-4 £1,000 5-49 £1,500 50-249 £2,500 250+ £5,000 Third parties £200 per day escalating (up to £50,000)

  26. Record Keeping • Employers,….., must keep records about their workers and the pension scheme used to comply with the employer duties. • An employer can use electronic or paper filing systems ………………………. ……..as long as these records are legible or can be produced in a legible way. • Most records must be kept for six years; …. those that relate to opting out must be kept for four years. • The records must be produced to The Pensions Regulator, if requested. • The Pensions Regulator can conduct an inspection if they have reasonable grounds to do so (e.g. if there is a Whistleblower).

  27. Data to be kept by employers Data will need to be kept for: • Workers who become scheme members (e.g. Name, DoB, NI number†, gross qualifying earnings, contributions paid). • Plus, for Jobholders only: • Date of automatic enrolment or the original format Opt In notice; • Contributions entitled to under scheme rules. • Plus, for Entitled Workers only: • Date with effect from which the worker became an active member; • The original format Joining Notice. • All workers for whom the employer has used postponement:(Name, NI number†, date the notice was sent to the worker). • Details of the pension scheme(s)†† used: • EPSR (Employer Pension Scheme Reference); • Any evidence showing that a scheme is a Qualifying Scheme; • Pension provider / scheme name & address. † where one exists†† data also to be kept by pension scheme provider

  28. Options to manage Complianceand record keeping • Manual administration • Payroll software • Accounting software • HR software • Bespoke Middleware Functionality ? Time ? Costs ?

  29. How does an Employer choose ? • Complexity of the business • Existing software (Payroll / HR etc) • Pension scheme provider solution exist ? • Bespoke Middleware ? • Functionality comparison of each option • Cost comparison of each option The employer duties must be delivered

  30. Middleware: Links with any/all external systems

  31. In Summary

  32. No provision Existing Provision • Take advice • Are you compliant ? • Eligibility ? • Contribution structure ? • Project Plan • Budget • Engage your staff • Communication • Processing & Record keeping • Payroll • Take advice • Plan ahead • Budget • Engage your staff • Communication • Processing & Record keeping • Payroll

  33. About Q&A People Matter Floor 34 Euston Tower 286 Euston Road London NW1 3DP Q&A People Matter has a comprehensive range of global services that provides a “one stop shop” solution for a company’s personnel and management, legal and employee benefit needs. We pride ourselves on being forward thinking and creative. Together with our Alliance Partners we have a wealth of knowledge and experience in the HR and Employee Benefits arena. Longdene HouseHedgehog LaneHaslemere, SurreyGU27 2PH Mollfort HouseKintyre Suite,Water Street, Ramsey,Isle of Man, IM8 1JP Dubai World CentreDubai UAE T: +44 (0) 845 4704818F: +44 (0) 845 4705018 info@qnapm.com www.qnapm.com

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