automatic enrolment in 2018/19 - the pensions regulator€¦ · quarterly forecast of employers due...

BA-Events Feb 2018 v2b These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Neil Esslemont, Head of industry liaison

Bex Woodley, Industry liaison manager

February 2018

Automatic enrolment in 2018/19for business advisers


Agenda

• Welcome and getting to know you

• Automatic enrolment:

– Introduction and overview of employer duties

– Supporting your new employer clients

– Are you ready for the contribution increases?

– Quiz

Coffee and networking

– Choosing a pension and tax relief

– What happens after declaration - cyclical re-enrolment

– Compliance and enforcement approach

– DWP 2017 review

– Myth busting - testing your knowledge

– Feedback and close

The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.


Introduction to automatic enrolment


Why was automatic enrolment introduced?

Past and predicted trends in the life expectancy period of 65 year

old men and women in the UK as of 2004 and 2010

7 million people under-

saving

There are currently four people of

working age for every pensioner.

By 2050 there will be just two.


Progress to date

More than 1 million employers have

automatically enrolled jobholders

Over 545,000 workers re-enrolled by

37,000 employers

Over 9 million employees have

been enrolled in workplace

pensions


Quarterly forecast of employers due to comply with AE


Automatic enrolment - employer duties


Automatic enrolment legislation gives employers a duty to:

� automatically enrol all staff who are eligible (‘eligible jobholders’)

� other staff have the right to ask to opt in or join a pension

� communicate to their staff

� manage opt outs and promptly refund contributions

� every three years, re-enrol staff who are eligible

� complete a declaration of compliance with the regulator (DoC)

� keep records

� maintain payments of pension contributions

The employee safeguards mean that employers:

� must not induce staff to opt out or cease membership of a pension, and

� must not indicate, when recruiting new staff, that the decision to employ them

will be influenced by whether or not they intend to opt out

Overview of legal duties and safeguards


Who is included in the automatic enrolment duty?

Staff may be subject to the automatic enrolment legislation if they are:

• aged 16 to 74 (inclusive), and

• work or ordinarily work in the UK* ...

... whether or not they are full time or part time, permanent or temporary.

So, this could include:

• staff working overseas who are considered ‘ordinarily working’ in the UK*.

However, the truly self employed are not subject to automatic enrolment.

* the Channel Isles and the Isle of Man are outside the UK


Is a director a worker?

• A director of a company is not classed as a worker, unless:

� the individual works for the company under a contract of employment

and

� there is at least one other person working for the company under a

contract of employment

- A director who is not working under an employment contract is never

classed as a worker

• The exemptions can apply to more than one director working for the

same company

• However, if a director who is classed as a worker triggers automatic

enrolment, the employer can choose whether or not to automatically enrol

or re-enrol them (the director will have the right to opt in or join a pension)


Type of work contract between

the individual and this company

Employer duties apply to

this individual?

Sole director/employee - Peter

(who is a director of this company with an

employment contract)�

Additional director - Sarah

(not on an employment contract) �Additional director - George

(not on an employment contract) �Additional director - Linda

(has a written contract of employment) √ (Peter* and Linda)

Example of sole employee/director exemption

* As there are two directors with contracts of employment, duties apply to both Peter and Linda. This would be the

same even if Linda was not a director and was just an employee - Peter’s exemption would stop when she joined.

However, an employer can choose whether or not to automatically enrol/re-enrol any directors who become eligible.


�Who is excluded?

Certain people are exempted from the AE duties, including:

• directors not working under an employment contract;

• a director who is working under an employment contract, where they are

the only employee in the company - but only for the work they carry out

for that company;

• office-holders who are not considered workers (eg non-executive

directors, trustees, elected members) - but they are only excluded for the

activities they carry out as an office holder;

• the (truly) self-employed.

• For more information:

� www.tpr.gov.uk/director-exemptions-from-automatic-enrolment.aspx

* See additional slides on “Exceptions” for more details


Employer option not to enrol

Employers may choose whether or not to automatically enrol or re-enrol

certain people*, if they trigger automatic enrolment, including:

• directors working under an employment contract;

• LLP partners who are not ‘salaried members’ under HMRC tax rules;

• people who are in their notice period;

• individuals who ceased active membership of a qualifying pension in the

previous 12 months;

• those with HMRC tax protected status for their pension savings.

Only the enrolment/re-enrolment duty is optional, all other duties remain

unchanged.

The individuals retain the right to ask to join or opt-in (except people working

their notice), in which case the employer is obliged to enrol them.

Even if the employer is able to choose not to enrol all of their staff:

• the employer still has to send the normal statutory letters/emails

• and make a declaration of compliance, at the usual time.

* See additional slides on “Exceptions” for more details

?


Does your client have AE duties for any contractors?

The (truly) self-employed are excluded from automatic enrolment (AE), but

how is this determined?

To check if your client has any automatic enrolment duties for a contractor who

works for them and is not their employee, there is a 3 part test:

A. If the contractor is not truly self-employed, would your client be considered

the employer?

B. Does the contractor have to do this work themselves (a personal contract)?

C. Is the individual carrying out the work as part of their own business?


Your client is considered to be the ‘employer’, for people who:

• are employed by your client (ie your client holds the contracts of employment)

or

• are directly contracted to perform work for your client and your client pays the

individuals (unless they are truly self-employed).

Note:

• If someone working for your client is employed by another company to do this

work (perhaps they are employed by an agency or their own limited company),

your client will not be considered the employer;

or

• if someone working for your client is not an employee - and is paid* for this

work by another business or agent (ie your client pays another person or

organisation for this work), then they will be responsible for the automatic

enrolment duties if any, not your client.

A) Is your client considered the ‘employer’?

*A payroll bureau that processes a payment on behalf

of your client would NOT be considered the employer.


B) Does the contractor have to do the work themselves?

• Your client should not assume that a contractor working for them is exempt

from automatic enrolment, even if they say they are self-employed …

• They may not be truly self-employed for the work they do for your client, even if

they are truly self-employed for work they do for another client.

• Your client should consider if the contract (which could be written, verbal or

implied), allows anyone to do this work.

• So, is the individual named in the contract and expected to do this work, unless

they are unable to do the work themselves (eg they are on holiday or sick)?

� If the individual can freely subcontract or substitute somebody else, then

your client will not have any automatic enrolment duties for the individual;

� or, if they have to do the work, this is considered a personal contract and

the employer will then need to judge whether the individual is doing the

work as part of their own business.


C) Is someone working as part of their own business?

If someone (who is not a director) is not an employee and has a ‘personal’

contract (ie are contracted to do the work themselves):

• The employer will need to consider whether the individual is working as part of their own business or not.

• There are a number of factors that will help decide this. Does the employer:

– have control of the hours they work?

– provide any employee benefits (eg sickness or holiday pay)?

– bear all the significant financial risks in carrying out the work

(eg the worker is not financially responsible for their faulty work)?

– consider the individual to be part of their own organisation?

– provide what is required for the individual to carry out the work (eg tools)?

� If most or all of the above are true, it would be reasonable to consider that the

individual is not undertaking the work as part of their own business and so are

subject to automatic enrolment.

• Otherwise, they are truly self-employed and are exempt.


To tell us you are not an employer

• If an employer does not believe they are an employer because:

– it is a sole director company, with no other staff

– it is a company with more than one director, where no more than one

director has an employment contract (and there are no other staff)

– the company has ceased trading

– the company has gone into liquidation or has been dissolved

– they no longer employ people in their home (eg cleaners, nannies,

personal care assistants)

Tell us at:

� https://automation.thepensionsregulator.gov.uk/notanemployer

• The tool is not for employers who:

– have no staff to enrol on their duties start date, or

– for companies in administration or in non-terminal insolvency


Qualifying earningsAge range

16-21 22-SPA* SPA*-74

* SPA = State Pension Age

** Figures for 2017/18

Eligiblejobholder

Employer must

automatically enroleligible jobholders into an

automatic enrolment pension scheme

Worker categories

Non-eligible jobholder

Non-eligible

jobholder

Non-eligible

jobholders can

opt in to an

automatic enrolment pension scheme

Entitled workerCan request to

join a pension

scheme

Non-eligible

jobholderMore than £10,000** pa

Over £5,876 pa

and up to £10,000** pa

Up to £5,876** pa


AE earnings triggers 2017-18†

Pay Reference

Period/Cycle

Earnings trigger for

automatic

enrolment

Annual £10,000 pa

Bi-annual £4,998.00

1 quarter £2,499.00

1 month £833.004 weeks £768.00

Fortnight £384.00

1 week £192.00

† For other Pay Reference Period (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.

The Secretary of State will review these figures each tax year.


Are joiners entitled to an employer contribution? 2017-18

Pay Reference

Period/Cycle

Those earning this

or less not entitled

to an employer

contribution


automatic

enrolment

Annual £5,876 pa £10,000 pa

Bi-annual £2,938.00 £4,998.00

1 quarter £1,469.00 £2,499.00

1 month £490.00 £833.004 weeks £452.00 £768.00

Fortnight £226.00 £384.00

1 week £113.00 £192.00

N.B. The Secretary of State will review these figures each tax year.


Postponement

• Postponement delays the duty of automatic enrolment and the need to assess

and can be used:

– at the employer’s duties start date for any or all existing staff

– on the first day of employment for any new joiner after the duties start date,

and

– on the date a member of staff meets the criteria to be an eligible jobholder.

• Only one postponement per member of staff can be made at a given time.

• Each worker can be postponed from one day up to maximum of three months.

• The employer must notify any postponed member of staff within six weeks

and a day of the start of postponement.

• The member of staff has the right to opt in or join during postponement.

• Employer must assess on the last day of postponement and:

– automatically enrol eligible jobholders, and

– for those staff not eligible, monitor them each future pay period.

Postponement does not change or

delay the duties start date or

declaration of compliance deadline


• Entitled workers can request to join a scheme at any time, including during

postponement.

• Jobholders can opt in at any time, including during postponement.

• However, workers will not necessarily know whether they are jobholders or

entitled workers and this could vary over time.

• All requests (whether an opt in or join request) are treated the same way.

• On receipt of any request to opt in or join a pension from a worker,

employers need to:

– assess the worker, to see if they are a jobholder or entitled worker, then

– enrol jobholders into an automatic enrolment scheme, and

– enrol entitled workers into a scheme of the employer’s choice.

• A jobholder must not be required to carry out any further action to achieve

active membership (eg the pension scheme should have a default fund).

Asking to join a pension scheme


• Workers automatically enrolled (or who have opted in) may opt out.

• Employer must inform staff of their right to opt out and how to opt out.

• The employer must not give out or send out opt out forms:

– requests to opt out must be handled by the scheme provider, and

– completed forms would normally be sent to the employer.

• A one calendar month opt out window starts on the later of two dates:

� once the worker is an active member of the pension scheme, or

� when the employer gives a notice of enrolment letter/email to the worker.

• If the worker opts out they will get a full refund of all contributions.

• Early opt outs (before the opt out window starts) - are not allowed.

• After the opt out window has closed, staff may still cease active membership

and normal pension scheme rules will apply (so they will not get a refund*).

• A worker who has opted out does not need to be assessed again until the

employer’s next re-enrolment date (occurs approx every 3 years).

* Short service refunds are no longer allowed if theyjoined on or after 1 October 2015

Asking to leave a pension scheme (opt out)


Record-keeping

• Employers must keep records about their workers and the pension

scheme used to comply with the employer duties (pension providers and

trustees will also have duties to keep records).

• An employer can use electronic or paper filing systems to keep or store

any records, as long as these records 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 provided to The Pensions Regulator, on request.

• We can conduct an inspection, if we have reasonable grounds to do so

(for example, this may be as a result of a whistle-blower alert).


Declaration of compliance • After staging, employers must complete a declaration of compliance

– and it must be completed within five months of the staging / duties start date and

– within five months of the 3rd anniversary of the staging / duties start

date (or previous re-enrolment date)

• Employers may receive a penalty fine if they do not complete their

declaration on time.

• Employers will need to provide certain details, for example:

– which pension schemes were used to comply with the duties,

– (after cyclical re-enrolment only) their chosen re-enrolment date,

– the number of eligible jobholders automatically enrolled into each scheme.

• All postponements applied at the staging / duties start date must have come to an end before the declaration can be completed.

• You can start the online process early and partially complete your declaration.

• To submit multiple declarations go to:

� www.tpr.gov.uk/how-to-submit-multiple-declarations-of-compliance-in-bulk.aspx


Log-in for new users


Changes to the declaration of compliance log-in page


Log-in for existing users


Supporting your new employer clients


• Individuals or organisations who become an employer from 1 October

2017 onwards, do not have a “staging date” (a pre-determined date when

their duties start).

• Their “duties start date” will be the contracted start date of their first worker.

• Postponement can be used in the normal way (ie up to 3 months).

• Employers will have to complete a declaration of compliance within five

months of their duties start date.

• See www.tpr.gov.uk/duties-for-new-employers-from-1-october-2017.aspx

• Employers who have a duties start date who stop employing staff, may not

know they do not have to make another declaration of compliance. If they

employ staff at a later date the original duties start date still applies.

New employers - from 1 October 2017 onwards


Mix of ‘staged’ and ‘new’ employers


• Where one employer acquires another, the staging / duties start date of each

employer will not change.

• If they remain legal entities in their own right, they will continue to have

employer duties for their respective staff.

• If any contracts of employment are transferred to another employer, the staff

transferred would be treated by the acquiring employer in the same way as any

new joiner (except TUPE rules may apply).

• However, if a new legal entity is created and has any staff transferred to it

and/or recruits new staff, the new entity will be treated as a ‘new employer’ and

will have its own duties start date.

• If a company is closed down or no longer has any staff – it is no longer an

employer and they can let us know at:

https://automation.thepensionsregulator.gov.uk/notanemployer

Mergers and acquisitions


New employers have AE duties from October 2017

I’ve employed someone

We identify

new employer

in RTI data

We send

employer our

‘Welcome

pack’ letter

Email

reminders

sent

Compliance

and

enforcement

starts

We do not

send any

letters before

duties start

date

AE duties

start date is

contractual

start date of

employee

It is important

to nominate a

contact,

including email

Declaration

deadline may

be later, if

they appear in

RTI data late

Same process

applies to all

new

employers


• We are putting information about AE in places a potential or new employer

would go to for help setting up as a new employer. For example:

– government organisations (eg DWP, HMRC, Gov.uk)

– industry organisations (eg employer bodies, professional bodies, trade

associations)

– pension providers’ websites.

• We would also like the following to communicate to their members / clients:

– business advisers (eg accountants, bookkeepers, IFAs, payroll admin)

– business networks

– payroll/software providers

– information hubs (eg specialist publishers of information for professionals

who provide business support and finance to start ups and small firms)

– retail banks.

How do new employers know about AE?


No letter code for “duties checker” - if new employer

www.tpr.gov.uk/en/employers


Communicating to staff

• Employers will need to communicate to their staff informing them of their

rights:

– enrolment

– when using postponement

– and to explain a worker’s right to opt in or join a scheme.

• The deadline for most communications is within 6 weeks*.

• Communications must be sent directly to the individual

(eg by letter, email, HR web portal).

• We have provided example ‘template’ letters, which may be customised

www.tpr.gov.uk/writing-to-your-clients-staff.aspx

• Translations are available in over 20 languages

www.tpr.gov.uk/doc-library/automatic-enrolment-letter-templates.aspx

• You can request templates in other languages by contacting us at

[email protected]

* Postponement 6 weeks from the day after the assessment date


Are you ready for the contribution increases?


Banded qualifying earnings 2017-18†

Pay Reference

Period/Cycle

Lower

Earnings Threshold

(LET)


automatic

enrolment

Upper Earnings

Threshold

(UET)

Annual £5,876 pa £10,000 pa £45,000.00 pa

Bi-annual £2,938.00 £4,998.00 £22,500.00

1 quarter £1,469.00 £2,499.00 £11,250.00

1 month £490.00 £833.00 £3,750.004 weeks £452.00 £768.00 £3,462.00

Fortnight £226.00 £384.00 £1,731.00

1 week £113.00 £192.00 £866.00

† For other Pay Reference Period (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.



Banded qualifying earnings 2018-19†

SUBJECT TO PARLIAMENTARY APPROVAL

Pay Reference

Period/Cycle

Lower

Earnings Threshold

(LET)


automatic

enrolment

Upper Earnings

Threshold

(UET)

Annual £6,032.00 £10,000.00 £46,350.00

Bi-annual £3,016.00 £4,998.00 £23,175.00

1 quarter £1,508.00 £2,499.00 £11,588.00

1 month £503.00 £833.00 £3,863.00

4 weeks £464.00 £768.00 £3,566.00

Fortnight £232.00 £384.00 £1,783.00

1 week £116.00 £192.00 £892.00

† For other Pay Reference Period (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.



Minimum contribution increases

See our minimum contribution increases letters

www.tpr.gov.uk/letters-and-emails-from-tpr.aspx

Oct 2012 April 6th

2019

April 6th

2018

Min DC

8% total*Min DC

5% total*

Minimum DC 2% total contribution*

Minimum DC 1% employer contribution*

Min DC 2%

employer*

Min DC 3%

employer*

Phase 1 Phase 2 Phase 3

*% of banded

qualifying earnings


Pensionable earnings

• Pensionable earnings can be based on qualifying earnings OR another

definition (eg basic pay).

• When qualifying earnings are used to determine pensionable pay:

– pension contributions are determined by the rules of the scheme, and

– will be based on banded earnings between the lower earnings threshold

and upper earnings threshold (currently £5,876*pa and £45,000*pa).

• If pensionable earnings are not based on qualifying earnings, the employer

can self certify if the scheme meets certain minimum criteria:

– ‘Set 1’ - if basic pay from £1 is pensionable, or

– ‘Set 2’ - if at least 85% of total pay (scheme average) is pensionable, or

– ‘Set 3’ - if 100% of total pay is pensionable.

– for the DWP self-certification template go to Annex E page 32: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/603588/money-purchase-schemes-guidance.pdf

* Pro-rata of annual amount used in each Pay Reference Period. These figures are for 2017-18. The Secretary of State will review this amount each tax year.


DC self certification legal minimum rates

Up to

5 April 2018

6 April 2018

to 5 April

2019

From

6 April 2019

Pensionable Salary

(Basis of

% Contributions)

Set 1

(Tier 1)

2% Employer

/ 3% Total

3% Employer

/ 6% Total

4% Employer

/ 9% Total

Scheme Definition

(if >= basic pay from £1)

Set 2

(Tier 2)

1% Employer

/ 2% Total

2% Employer

/ 5% Total

3% Employer

/ 8% Total

≥85% of Total Pay

(scheme average)

Set 3

(Tier 3)

1% Employer

/ 2% Total

2% Employer

/ 5% Total

3% Employer

/ 7% Total

100% of

Total Pay

For the self-certification template go to Annex E page 32 with further guidance from DWP: www.gov.uk/government/uploads/system/uploads/attachment_data/file/307083/money-purchase-schemes-guidance.pdf


Calculating the higher contribution payments

• Many payroll software systems use tax based pay reference periods. This means that the first tax period of 2018/19 will start on the 6th April 2018 - and so the higher legal minimum rates would apply in full to all pension contributions.

• However, an employer may be using calendar pay reference periods, which span two tax years.

• For example, monthly periods which start on the 1st April and end on the 30th April. Or a calendar week pay period could start Monday 2nd April and end Sunday 8th

April.

• In this case, the pension scheme rules / T&Cs may mean that the increased rates only apply to a proportion of earnings, as part of the contributions are for the period which falls in the old tax year and part for the new tax year.

• Many pension providers are willing to accept contributions with no pro-ration applied, where the higher % rates are used if pay day falls on or after 6 April (even if the pay period spans two tax years).

• However, check with the pension provider to see if they are using this approach.

• Employers should also check their payroll will be making the correct deductions.


When is consultation required

• If an employer wishes to make changes to the pension they will need to consult

with staff if:

– there are 50 or more employees (average over past 12 month and to

include leavers)

AND

– it is a ‘listed event’ (this does not include a change that is required to meet

statutory obligations), for example:

• closing a pension (eg when changing pension provider)

• introducing or increasing employee contributions

• reducing employer contributions

• changing the elements that constitute pensionable earnings

� for full details of listed events www.legislation.gov.uk/uksi/2006/349/pdfs/uksi_20060349_290216_en.pdf


Changing contribution rates

• We recommend employers write to staff to tell them when the rates are

increasing, but they should not suggest that they could cease membership

or reduce their contributions.

• Employers must not take any action, the ‘sole or main purpose’ of which, is

to induce staff to cease active membership of a qualifying scheme (and this

includes inducing staff to reduce their contributions – if it means they would

become an active member of a non-qualifying scheme).

• If scheme rules allow, rather than ceasing membership, staff could reduce

their contribution rate, even if the total rate goes below the legal minimum;

– but many pension schemes do not allow this.

• If a member of staff does reduce their contribution rate:

– the employer may or may not be obliged to continue to pay the full

employer contribution, depending on the scheme rules

– if the employer rate or total contribution rate becomes lower than the

legal minimum, the pension will then become non-qualifying for this

member of staff (and they will need to be re-assessed at re-enrolment).


Automatic enrolment - quiz


Who is exempt

Which of these people are exempt and should never be automatically

enrolled?

A. LLP partners who are workers and are not ‘salaried members’

under HMRC tax rules

B. directors working under an employment contract, where there is

more than one employee

C. directors not working under an employment contract


Who is exempt

Which of these people are exempt and should never be automatically

enrolled?

A. LLP partners who are workers and are not ‘salaried members’

under HMRC tax rules

B. directors working under an employment contract, where there is

more than one employee

C. directors not working under an employment contract �


New employers

Which statement is true for employers who become an employer from

1 October 2017 onwards?

A. Their duties start date will be the contracted start date of their first

worker.

B. Their duties start date will be determined by when they first use a

PAYE scheme to pay any of their staff.


New employers

Which statement is true for employers who become an employer from

1 October 2017 onwards?

A. Their duties start date will be the contracted start date of their first

worker.

B. Their duties start date will be determined by when they first use a

PAYE scheme to pay any of their staff.

We are likely to first become aware of a new employer shortly after they

make their first RTI submission, but their duties start date is set by their

first worker’s start date.

�


On 1 June 2018, ACME Workshops Ltd buys another company, Betamax

Videos Ltd. Some of Betamax’s staff have their contracts of employment

transferred to ACME on 1 June 2018.

They merge their payroll systems and Betamax starts to pay their remaining

staff using ACME’s PAYE reference.

Which statement is true?

A. Betamax’s staging date is changed to become the same as ACME’s.

B. The staff transferred to ACME are treated as new joiners by ACME and, if

eligible, need to be automatically enrolled – even if they opted out in the

last 12 months.

C. Both ACME and Betamax are treated as ‘new employers’ and each now

have a duties start date of 1 June 2018.



On 1 June 2018, ACME Workshops Ltd buys another company, Betamax

Videos Ltd. Some of Betamax’s staff have their contracts of employment

transferred to ACME on 1 June 2018.

They merge their payroll systems and Betamax starts to pay their remaining

staff using ACME’s PAYE reference.


A. Betamax’s staging date is changed to become the same as ACME’s.

B. The staff transferred to ACME are treated as new joiners by ACME and, if

eligible, need to be automatically enrolled – even if they opted out in the

last 12 months.

C. Both ACME and Betamax are treated as ‘new employers’ and each now

have a duties start date of 1 June 2018.


�


Your client uses a calendar monthly pay reference period, paid in arrears. For

the April 2018 payroll run, the pay period starts 1 April and ends on 30 April.

Pay day is on the first Friday of the month – on Friday 6 April 2018.

Your client is using a pension scheme with legal minimum rates and on 6 April

these rates are changing from [1% + 1%] to [2% employer + 3% employee].


A. Their pay was earnt in March, so payroll should deduct 1% of their

qualifying earnings from members’ salary.

B. Payroll should deduct 3% of their qualifying earnings from members’ salary.

C. The payments depend on what the pension scheme rules specify.

D. April has 30 days, so payroll should pro-rate and deduct from salary

[1% x 5/30th] + [3% x 25/30th] of their qualifying earnings.

Paying increased pension contributions in 2018/19


Your client uses a calendar monthly pay reference period, paid in arrears. For

the April 2018 payroll run, the pay period starts 1 April and ends on 30 April.

Pay day is on the first Friday of the month – on Friday 6 April 2018.

Your client is using a pension scheme with legal minimum rates and on 6 April

these rates are changing from [1% + 1%] to [2% employer + 3% employee].


A. Their pay was earnt in March, so payroll should deduct 1% of their

qualifying earnings from members’ salary.

B. Payroll should deduct 3% of their qualifying earnings from members’ salary.

C. The payments depend on what the pension scheme rules specify.

D. April has 30 days, so payroll should pro-rate and deduct from salary

[1% x 5/30th] + [3% x 25/30th] of their qualifying earnings.

Paying increased pension contributions in 2018/19

�


Your client is using a legal minimum pension scheme and on 6 April the rates

change from [1% + 1%] to [2% employer + 3% employee].

The scheme rules do allow members to choose to pay a contribution rate lower

than the legal minimum.

If, in May 2018, an existing pension scheme member decides to reduce their

contributions to 2%, which statement is true?

A. They will get a refund of 1%, for all contributions paid since 6 April 2018.

B. They will become an active member of a non-qualifying scheme and need

to be reassessed on your client’s next re-enrolment date.

C. They have to cease membership and then re-join the pension at the lower

contribution rate of 2%.

D. Your client is legally obliged to continue to pay 2% employer contributions.

Staff who want to reduce contributions in 2018/19


Your client is using a legal minimum pension scheme and on 6 April the rates

change from [1% + 1%] to [2% employer + 3% employee].

The scheme rules do allow members to choose to pay a contribution rate lower

than the legal minimum.

If, in May 2018, an existing pension scheme member decides to reduce their

contributions to 2%, which statement is true?

A. They will get a refund of 1%, for all contributions paid since 6 April 2018.

B. They will become an active member of a non-qualifying scheme and need

to be reassessed on your client’s next re-enrolment date.

C. They have to cease membership and then re-join the pension at the lower

contribution rate of 2%.

D. Your client is legally obliged to continue to pay 2% employer contributions.

Staff who want to reduce contributions in 2018/19

�


Pension schemes


Does the employer need a pension?

• The employer should have an automatic enrolment pension scheme in place

by their duties start date if they have someone to automatically enrol on this

date.

• If there is no one who needs to be automatically enrolled, then a pension

scheme does not need to be set up ...

– but it may be useful to decide which pension would be used if someone

asks to join or meets the criteria to be automatically enrolled.

• The employer has the right to select the pension and can choose to decline

any employee’s request to contribute to a different pension scheme.

• If the employer wants to use a scheme requested by a member of staff they

need to check that it can be used and is a qualifying scheme.


What pension schemes can be used?

� must be registered in the UK or EEA*� must have no barrier to automatic enrolment

� must be a qualifying scheme

Automatic enrolment scheme

Qualifying scheme

� must be tax registered:� and meet minimum criteria

Workers already

active members of a

qualifying scheme do

not need to be

automatically enrolled

Must be used

for automatic

enrolment and

‘opt ins’

Employers will

need to contribute

to the pension

scheme

*European Economic Area states

Employers may also

use a qualifying scheme

or an automatic

enrolment scheme for

entitled workersScheme for

entitled workers� scheme

is registered

Employers are notrequired to make an

employer contribution


Choosing a new pension - how to find one

Pensions suitable for automatic enrolment:

On our website, we list those providers that have said they have pensions

available to all small employers looking for a pension for automatic enrolment:

– NEST - the pension set up by government

– Pensions regulated by the Financial Conduct Authority (FCA)

– Independently reviewed master trust pensions

• the master trust assurance framework provides an independent review

against an industry-wide benchmark of quality

• these features in our DC code represent the standards of governance

and administration that we expect trustees to attain

• See: www.tpr.gov.uk/find-a-new-pension-scheme-for-clients.aspx


Tax relief on members’ pension contributions

• Many small employers and their advisers may not realise that there are two

ways that the tax relief on staff members’ pension contribution can be applied:

– Net Pay Arrangement (NPA)– Relief At Source (RAS) - also known as (‘not Net Pay Arrangement’)

• Many pension schemes only support one tax relief method, although some

pension providers allow the employer to choose either method.

• It is vital to understand which system your clients are going to use, to avoid

miscalculating the contributions and tax due.

• For more information look at the ‘tax relief’ section at:

www.tpr.gov.uk/what-to-consider-when-choosing-a-scheme.aspx

• However, if your client is using salary sacrifice for pension contributions then

NPA or RAS does not apply.


Tax relief mechanisms used by pensions on our list †

Net Pay Arrangement (NPA) Relief At Source (RAS)

Workers Pension Trust True Potential Investments

AutoEnrolment.co.uk (Smart Pension) The People’s Pension1

Welplan Pensions NEST

The Creative Pension Trust Aviva Workplace Pension

Ascot Lloyd Pension Trust Standard Life Workplace Pension2

The BlueSky Pension Scheme

Corporate Pensions Trust

1 Relief at source is the default, but some employers may have chosen to use NPA instead.2 Large employers may be using the trust based scheme, which uses NPA (the GPP uses RAS).

See: www.tpr.gov.uk/en/employers/duties-checker/outcomes/i-am-an-employer-who-has-to-provide-a-

pension/choose-a-pension-scheme-or-check-your-existing-one/what-to-look-for-in-a-pension-scheme.aspx

† Please note this does not apply to Salary Sacrifice arrangements


Applying tax relief on staff contributions†

Net Pay Arrangement (NPA) Relief At Source (RAS)

Staff contribution is taken gross (£1 for

£1), before tax has been deducted

Staff contribution is only 80p in the £1,

after tax has been deducted

No tax is deducted from the employee’s

pension contribution

The pension provider will claim 20p in the

£1 from HMRC and add it to the pension

pot (even if they are not paying any tax)

Currently, for a legal minimum pension,

1% of qualifying earnings should be

taken from their gross pay

Currently, for a legal minimum pension,

0.8% of qualifying earnings is taken from

their net pay

In 2018/19, for a legal minimum

pension, 3% of qualifying earnings will

be taken from their gross pay

In 2018/19, for a legal minimum pension,

2.4% of qualifying earnings will be taken

from their net pay

Higher rate tax payers will need to make an

HMRC Self Assessment or will have their

tax code adjusted

† Please note this does not apply to Salary Sacrifice arrangements


Salary sacrifice / salary exchange

• If your client is using salary sacrifice for pension contributions then, for any of

their staff who are participating in this arrangement:

– their contractual salary will have been reduced and, in exchange, the

employer will be paying higher pension contributions

– Net Pay Arrangement or Relief At Source cannot be used for these

contributions, as they are being paid by the employer

– the individual will not pay tax or NI on the sacrificed part of their salary

– but salary cannot be sacrificed to below the national living wage.

• If any of your clients are using salary sacrifice for pension contributions, then:

– the contract could have been written so that the sacrificed amount will

increase in line with the prevailing legal minimums

– or the salary sacrifice contract may need to be changed to reflect the

higher contribution rates applicable from 6th April 2018

– or any increase in employee contributions due would need to be deducted

from pay.



What happens after the duties start date and declaration?


Re-enrolment - two types

There are two types of re-enrolment.

• Cyclical re-enrolment:

– On a three-yearly cycle, an employer must re-enrol certain eligible

jobholders back into an automatic enrolment scheme.

• Immediate re-enrolment:

– If a jobholder, not through their own choice, ceases active membership of

a qualifying scheme (eg if the scheme ceases being a qualifying one), the

employer must put them into an automatic enrolment scheme immediately.

• Whether cyclical or immediate, the process of automatic re-enrolment is

broadly the same as for automatic enrolment.

• But, in both cases, postponement cannot be used.


Changing pension provider

If an employer wishes to change pension provider*:

i. if moving from one Master Trust to another, the employer could complete a

binding contract of participation in the new qualifying Master Trust, before their

current scheme ceases to be a qualifying workplace pension, so there is a

seamless continuation of contributions; or

ii. the employer could contractually enrol all the existing pension scheme

members into the new qualifying pension scheme (any staff that did not

consent to this would have iii below applied); or

iii. the employer could make their current pension non-qualifying (eg by

cancelling the employer contract/agreement to pay contributions) and trigger

immediate re-enrolment.

If the employer is also changing the AE assessment system (eg payroll software

or pension provider’s AE assessment system) they will need to ensure that all

relevant employee history is transferred (eg history of opt ins, opt outs etc).

Note: If the members leave the old pension or join the new pension part way

through a pay reference period, then pro-rated contributions may be due.

* Employers with 50 or more employees will need to consult with their staff


How often do you need to assess?

Worker status – will be one of these: Action

Those who are an active member of a

qualifying scheme

No assessment required

i. Those who are not an active member of a

qualifying pension scheme;

andii. are not under postponement;

andiii. have not previously been automatically

enrolled (or assessed as an eligible

jobholder whilst an active member of a

qualifying scheme).

Monitor

(assess every pay period)

Those who have opted out or voluntarily

ceased membership of a qualifying scheme

Assess at each cyclical

re-enrolment date


Cyclical re-enrolment - overview

• On a three-yearly cycle, an employer must re-enrol certain eligible staff back

into an automatic enrolment scheme.

• The re-enrolment date is based on the employer's original staging / duties start

date - and not on when any members of staff were put into or left a pension

scheme.

• The employer is required to select a cyclical automatic re-enrolment date, in a

6 month window, on which to assess and re-enrol all of their eligible staff.

• The re-enrolment process :

– takes place alongside the normal pay period assessment process, and

– occurs in the pay period in which the cyclical re-enrolment date falls.

• Unlike the normal pay period monitoring and assessment process,

postponement cannot be used for those being re-enrolled.

• As with the original staging process, some advance planning is required.


Choosing the cyclical re-enrolment date

Cyclical re-enrolment occurs about every three years.

• Choosing the re-enrolment date:

– you can choose any day within a 6 month window, starting 3 months before

the third anniversary of the staging / duties start date or previous re-

enrolment date (eg an employer who staged on 1 Oct 2015, may choose

any day between 1 July and 31 Dec 2018);

– the employer can only choose one date (eg an employer cannot use one

date for monthly paid workers and another for weekly paid workers).

• For those being re-enrolled, this will be:

– the effective start date of membership of a pension scheme,

– the start of the 6 week ‘joining window’ (during which the re-enrolment

letter needs to be issued and active membership achieved),

– the start date of the calculation of pension contributions.


Example – staging date to first re-enrolment date

10 Dec 2018chosen re-enrolment date – applies to staff on all pay frequencies

3rd anniversary of staging date1 Oct 2018

28 Feb 2019deadline for

re-declaration of compliance (5 months from 3rd anniversary)

6 month re-enrolment window

31 Dec 2018latest date

1 July 2018earliest

date

11 Dec 2017 earliest day of opt-out / cease

membership that allows employer

to choose to leave until next

re-enrolment date

Staff who ceased membership of qualifying scheme in previous 12 months may be left to employer’s

next re-enrolment date


Considerations when choosing a date

Considerations when choosing a cyclical re-enrolment date

• Postponement cannot be used so, if the re-enrolment date selected is part

way through a pay reference period, then pro-rated contributions may be due.

• Questions to ask the pension provider:

– Does the pension scheme require pro-ration (and, if so, can the scheme

rules be changed)?

• Questions to ask the software provider :

– Can system calculate pro-rated pension contributions (if required)?

• If the pension scheme requires pro-ration, or if the software is not able to

calculate pro-rata contributions, can a re-enrolment date be found which is the

start of a pay reference period for all pay cycles?


Exceptions - where the employer has a choice

Employers may choose whether or not to re-enrol anyone who triggers

re-enrolment, if any one of these conditions apply:

• they are directors working under an employment contract, or

• they are LLP partners, but are not ‘salaried members’ under HMRC tax rules

(duties continue to apply in full to ‘salaried members’), or

• they are in their notice period (ie notice has been given or received before or

up to 6 weeks after the re-enrolment date), or

• they have HMRC tax protected status for their pension savings, or

• within the last 12 months (ie in the 12 months prior to the chosen

re-enrolment date):

• they opted out or ceased active membership of a qualifying pension, or

• they received a winding-up lump sum payment from a trust based

pension scheme and ceased employment, and then re-joined the employer.

If anyone asks to opt in or join a pension, the employer must enrol them – except

those in their notice period, who lose their right to opt in or join.


Declaration of compliance after cyclical re-enrolment

• The re-declaration can be completed on or after the cyclical re-enrolment

date (postponement cannot be used for re-enrolment).

• The deadline for completing the re-declaration is 5 months after the 3rd

anniversary of the staging / duties start date (or previous cyclical re-

enrolment date).

• Don’t wait until the deadline – do it as soon as you have run payroll and

done the assessment – or you may forget.

• Even if the employer has no one to re-enrol , they will need to choose a

re-enrolment date and must make a re-declaration.

• Make sure you have agreed whether you or your client is doing the

declaration.

• As part of the re-declaration process, the employer must give TPR their

chosen automatic re-enrolment date.


Automatic enrolment

Compliance and enforcement



Our approach:

• To educate and inform employers to help them comply.

• We want employers to contact us if they are experiencing difficulties.

If an employer chooses to ignore their duties - this is unacceptable and statutory

notices, fixed penalty fines and daily escalating penalties can be issued for non-

compliance, including:

– a £400 fixed penalty for failing to complete a declaration of compliance,

– and escalating fines which increase every day at these rates:

Approach


• Some of our powers used

(to 30 September 2017):

– 391 information notices

– 851 statutory inspection notices

– 62,462 compliance notices

– 2,972 unpaid contribution notices

– 24, 779 fixed penalty notices

– 5,331 escalating penalty notices

(EPN)

• We publish details of those that have:

– paid their EPN fine, but remain non-compliant; or

– failed to pay their EPN fine and are subject to a court order

�www.tpr.gov.uk/doc-library/escalating-penalty-notices.aspx

Use of powers

83,614 cases closed by

30 September 2017


� Employers who receive a statutory notice and disagree with our decision to

issue it must first ask us for a review (9,456 to 30 September 2017 of which

6,371 were revoked, substituted or varied)

� If they disagree with the outcome of that review they can then appeal the

decision to the Tribunal Service

� Employers have 28 days after the review decision is issued in which to appeal

� An increasing number of people are appealing their fines at Tribunal but 98%

of cases have been rejected (of the 386 requests to 30 September 2017)

� The Tribunal will focus on whether the employer has a reasonable excuse for

not complying with the compliance notice. Poor excuses include:

– the online system is too difficult to use

– no reminder was received

– the member of staff in charge of AE or the employer was ill

– a mistake was made

Reviews and tribunals


• Employers receive County Court orders to pay their automatic enrolment fines

– the order may be registered as a County Court Judgment - it would then

affect their credit record and potentially their ability to get a mortgage,

credit card or even a bank account in the future (it remains on the register

for 6 years)

• Pubs, clubs and restaurants are at a higher risk of non-compliance with:

– a larger than average number of temporary workers

– a higher level of English as a second language, and

– many employees on non-standard contracts

� there’s information on our website on how to assess and enrol people who

work varying hours:

• www.tpr.gov.uk/fluctuating

� and staff letter templates are now available in some other languages:

• www.tpr.gov.uk/doc-library/automatic-enrolment-letter-templates.aspx

County Court Judgements


Intelligence

Source: The Pensions Regulator Automatic enrolment:

commentary and analysis 2017

• The key issues raised through whistleblowing are shown above.

• We also have other intelligence channels to support our compliance work:

– other agencies, intermediaries, payroll bureaux and pension providers

– shared data with government partners (in line with the Data Protection Act)

– RTI data


• We have carried out many spot checks across the UK to ensure employers

are complying with their duties

• Inspection teams have visited dozens of businesses to check that qualifying

staff are being given the workplace pensions they are entitled to

• The checks also help us to understand whether employers are facing any

unnecessary challenges that we can help them with, such as by improving

our guidance

• They will also highlight employers who have not taken the required steps to

become or remain compliant, paving the way for enforcement action

• When we undertake an inspection of an employer’s premises, we may also

inspect the premises of a third party under the same legal power:

– when information relevant to the employer’s business and/or their

automatic enrolment duties is held by a third party

Spot checks


TPR’s approach is that an employer should take reasonable steps to put the

worker back in the position they would have been in, if the breach had not

occurred.

So, if an employer fails to enrol a worker from their staging date they should:

• enrol them, backdated to the original date, and let staff know what is happening

• pay any unpaid employer contributions

• give employees the option to pay their backdated contribution, unless the

employer chooses to pay them (some pension schemes may allow member’s

backdated contributions to be paid in instalments).

If the employer has not completed the actions and remedies required by our

compliance notice, within 3 months of the specified deadline, TPR has the power:

• to require the employer to pay both their own and employee contributions

and/or

• to require interest to be added to outstanding contributions.

What if an employer makes a mistake?


• We have successfully prosecuted a Greater Manchester bus firm and its

managing director for deliberately not putting staff into a workplace pension

• Stotts Tours (Oldham) Limited failed to enrol 36 members of staff into a

workplace pension and pay pension contributions from June 2015

• Managing director Alan Stott was accused of either consenting or conniving

in the bus company’s offence, or allowing the offence to be committed by

neglect.

• Stotts Tours and Mr Stott pleaded guilty to 16 offences of wilfully failing to

comply with the law

• Stotts Tours was ordered to pay a £27,000 fine, £7,400 costs and a £120

victim surcharge. Alan Stott was ordered to pay a £4,455 fine and a £120

victim surcharge. In addition, Stotts Tours (Oldham) had £14,400 in civil fines

imposed for non-compliance.

• Stotts Tours must also pay an estimated £10,000 in backdated pension

contributions for its staff, as well as paying all ongoing contributions that fall

due, or they will face further enforcement action from TPR.

First criminal prosecution - with bill of over £60,000


Other issues to consider


Scams - 5 tips for your clients and their staff

1. If you think you’ve been scammed – act immediately

2. Cold called about your pension? Hang up!

3. Beware of exotic sounding investments and offers of unusually high returns. If

it sounds to good to be true, then it is.

4. Use advisers registered with the FCA.

5. Don’t take tips from friends, check everything yourself.

� Member booklet - www.tpr.gov.uk/docs/pension-scams-booklet-members.pdf

DM 6031012 v2L These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Mitigation against cyber threats

• Most cyber attacks exploit basic weaknesses in software and IT systems

• Government estimates that 80% of breaches could be prevented by

following these ten steps

• National Cyber Security Centre (part of GCHQ):

– 10 steps to cyber security

www.ncsc.gov.uk/guidance/10-steps-executive-summary

• Cyber Essentials is a Government-backed, industry-supported scheme to

help organisations protect themselves against the most common threats

found on the internet. It shows you how to fix basic weaknesses and get a

good level of cyber security in place.

www.cyberaware.gov.uk/cyberessentials

• Prepare for GDPR – controls put in place will also help mitigate the cyber

risk


DWP 2017 review

• In 2016, average opt-out rate 9% (same as 2015) / average opt-in rate 5%.

• But many working-age people will not meet their retirement expectations,

particularly younger workers and those in low paid part-time jobs.

• Many people are now beginning to save, but for many reasons do not

actively engage with their pensions – so member engagement is important

(eg advertising / pensions dashboard).

Key proposals (possibly from 2020/21):

• Automatic enrolment threshold age to be lowered to 18 (from 22)

• The lower level of qualifying earnings will be set to £0:

– the “entitled worker” category will no longer apply - all workers aged 16 to

74 will be able to opt in to receive the employer’s contribution

(including part time workers / those who work for multiple employers)

– contributions based on banded qualifying earnings will start from £0.

• The self-employed will not be considered for automatic enrolment, as most

of them cannot be covered by the current design of automatic enrolment.


Automatic enrolment – myth busting and testing your knowledge


Postponement

Your client would like to move their duties start date and postpone it by 3

months. Which one of the following statements is true?

A. They can use postponement and should inform The Pensions

Regulator as soon as possible and agree a new date.

B. They cannot change their duties start date.


Postponement

Your client would like to move their duties start date and postpone it by 3

months. Which one of the following statements is true?

A. They can use postponement and should inform The Pensions

Regulator as soon as possible and agree a new date.

B. They cannot change their duties start date.

• An employer can use postponement, which delays the need to assess or

automatically enrol a member of staff for up to 3 months, but:

• the duties start date stays the same

• the declaration of compliance date remains the same

• they must notify any postponed worker within six weeks of the start of

postponement

• during postponement the worker has the right to opt in or join a pension

• there is no need to inform us, but records should be kept.

�


Duties

If your client has no one to automatically enrol, which step can they leave

out (until they do have someone to automatically enrol)?

A. write to staff

B. complete a declaration of compliance

C. set up a pension scheme


Duties

If your client has no one to automatically enrol, which step can they leave

out (until they do have someone to automatically enrol)?

A. write to staff

B. complete a declaration of compliance

C. set up a pension scheme �


Declaration of compliance

Which of these companies must complete a declaration of compliance?

A. a company with no staff, other than its directors, where two or

more of them have a contract of employment

B. a company with no staff, other than its directors, where none of

them have a contract of employment

C. a company with only one member of staff, who is also a director of

the company.


Declaration of compliance

Which of these companies must complete a declaration of compliance?

A. a company with no staff, other than its directors, where two or

more of them have a contract of employment

B. a company with no staff, other than its directors, where none of

them have a contract of employment

C. a company with only one member of staff, who is also a director of

the company.

• As there are two directors with contracts of employment the company

must complete a declaration and write to them.

�



Your client staged in 2016, but has now decided to change pension provider.

They have 49 employees (all working full time).

Which one of the following statements is true?

A. they must consult with their staff over the changes

B. they must complete a declaration of compliance within 5 months of the

date the new pension scheme starts to be used

C. they could use re-enrolment to transfer any staff who are members of

the old pension scheme into the new pension.



Your client staged in 2016, but has now decided to change pension provider.

They have 49 employees (all working full time).

Which one of the following statements is true?

A. they must consult with their staff over the changes

B. they must complete a declaration of compliance within 5 months of the

date the new pension scheme starts to be used

C. they could use re-enrolment to transfer any staff who are members of

the old pension scheme into the new pension.

• Employers with less than 50 staff do not have to consult.

• No declaration of compliance is needed for this change – one will only be

due after the next re-enrolment date.

• All staff are full time and so earn above the Lower Earnings Threshold.

So immediate re-enrolment would be triggered once contributions to the

old pension stop.

�



Which of these statements is true when completing the re-declaration of

compliance?

A. an employer can use postponement

B. the deadline is within five months of the 3rd anniversary of the

staging / duties start date (or previous re-enrolment date)



Which of these statements is true when completing the re-declaration of

compliance?

A. an employer can use postponement

B. the deadline is within five months of the 3rd anniversary of the

staging / duties start date (or previous re-enrolment date)

• Postponement cannot be used at re-enrolment. The deadline for

completing the declaration is five months from the 3rd anniversary of the

staging / duties start date.

�


Monitoring after cyclical re-enrolment

A member of staff was automatically enrolled, but subsequently decided to

reduce their contribution rate - and the employer contributions and/or total

contributions are now below the legal minimum.

On their employer’s next re-enrolment date, because this person is working

part time with variable hours, their qualifying earnings happen to be below

the automatic enrolment threshold.

Which of these statements is true?

A. their employer will now have to monitor (assess) them in every

future pay period – and automatically enrol them if they become

eligible.

B. their employer should leave them and re-assess them on the

following re-enrolment date, in about 3 years time.

C. no further action is necessary, since the pension scheme rules allow

members to choose to reduce their contributions.


Monitoring after cyclical re-enrolment

A member of staff was automatically enrolled, but subsequently decided to

reduce their contribution rate - and the employer contributions and/or total

contributions are now below the legal minimum.

On their employer’s next re-enrolment date, because this person is working

part time with variable hours, their qualifying earnings happen to be below

the automatic enrolment threshold.

Which of these statements is true?

A. their employer will now have to monitor (assess) them in every

future pay period – and automatically enrol them if they become

eligible.

B. their employer should leave them and re-assess them on the

following re-enrolment date, in about 3 years time.

C. no further action is necessary, since the pension scheme rules allow

members to choose to reduce their contributions.

�


Karen is not an employee, but is she subject to AE?

Karen is a self-employed graphic designer who regularly works for ACME

Workshops Ltd, but works for other clients too. Karen’s contract with ACME does

not permit her to send a replacement. Karen designs all of ACME’s flyers and

magazine ads and also designs and updates their website.

Karen generally works from home, but sometimes she works in ACME’s offices.

She uses her own equipment to print the flyers and, if something goes wrong with

the printing, she produces a replacement batch at her own expense.

When she is given a project to do, ACME set a deadline, but leave it up to her to

plan when, where and how the work will be done. Karen invoices ACME at the

end of each project that she works on.

Question - Should ACME Workshops consider Karen to be subject to AE?

A – Yes

B – No


Karen is not an employee, but is she subject to AE?

Karen is a self-employed graphic designer who regularly works for ACME

Workshops Ltd, but works for other clients too. Karen’s contract with ACME does

not permit her to send a replacement. Karen designs all of ACME’s flyers and

magazine ads and also designs and updates their website.

Karen generally works from home, but sometimes she works in ACME’s offices.

She uses her own equipment to print the flyers and, if something goes wrong with

the printing, she produces a replacement batch at her own expense.

When she is given a project to do, ACME set a deadline, but leave it up to her to

plan when, where and how the work will be done. Karen invoices ACME at the end

of each project that she works on.

Karen cannot reasonably be considered a worker, so is not subject to AE, as:

i) she markets her services to other clients, ii) she uses her own equipment

iii) she works unsupervised and iv) she guarantees the quality of her work.

�


Eddie is a self-employed IT professional who works full time for

ACME Workshops Ltd, supporting their in house payroll system. He works in a

team alongside ACME’s own employees and, when he meets external

contacts, uses business cards identifying him as a member of ACME’s staff.

Although Eddie usually works in ACME’s offices, he can work from home if he

gets permission in advance. Whether he’s in the office or at home he uses a

laptop and software provided by ACME.

Eddie is paid at the end of each month based on the number of days he has

worked. He bears no financial responsibility if he misses a deadline or makes

a mistake in his work.

Question - Should ACME Workshops consider Eddie to be subject to AE?

A – Yes

B – No

Eddie is not an employee, but is he subject to AE?


Eddie is a self-employed IT professional who works full time for

ACME Workshops Ltd, supporting their in house payroll system. He works in a

team alongside ACME’s own employees and, when he meets external

contacts, uses business cards identifying him as a member of ACME’s staff.

Although Eddie usually works in ACME’s offices, he can work from home if he

gets permission in advance. Whether he’s in the office or at home he uses a

laptop and software provided by ACME.

Eddie is paid at the end of each month based on the number of days he has

worked. He bears no financial responsibility if he misses a deadline or makes

a mistake in his work.

Eddie can reasonably be considered a worker and subject to AE, because:

i) he is integrated into ACME’s operation

ii) he is subject to a degree of control by ACME

iii) he uses their equipment and supplies, and

iv) he does not guarantee his work.

Eddie is not an employee, but is she subject to AE?

�


Useful links

• Frequently asked automatic enrolment questions:www.tpr.gov.uk/automatic-enrolment-enquiries.aspx

• The essential guide to automatic enrolment:www.tpr.gov.uk/docs/the-essential-guide-for-automatic-enrolment.pdf

• Our detailed guides for employers and pension professionals:www.tpr.gov.uk/employers/detailed-guidance.aspx

• Information about declaration of compliance:www.tpr.gov.uk/completing-the-declaration-of-compliance.aspx

• Letter templates for employers:www.tpr.gov.uk/writing-to-your-clients-staff.aspx


Useful tools

• The ‘Duties checker’:www.tpr.gov.uk/en/employers/duties-checker

• Nominate a point of contact:https://automation.thepensionsregulator.gov.uk/Nomination

• Find a letter code online:https://automation.thepensionsregulator.gov.uk/LetterCode

• Tell us you are ‘not an employer’:https://automation.thepensionsregulator.gov.uk/notanemployer

• Bulk declaration of compliance (file upload):https://www.autoenrol.tpr.gov.uk/

• Work out pension contributions:www.tpr.gov.uk/employers/employer-contributions.aspx

• State Pension Age calculator – www.gov.uk/calculate-state-pension


Summary of deadlines

Action/Communication Deadline

Letter to workers who are not already in a qualifying pension scheme at staging

6 weeks after staging / duties start date

Joining window, enrolment notifications and transitional period notices

6 weeks from the assessment date (eg by 23:59 on Tuesday 12 May, if assessed Wednesday 1 April).

opt out window 1 month from when both:• the enrolment notification is given, and• active membership is achieved.

Postponement notices 6 weeks from the day after the assessment date (eg by 23:59 on Wednesday 13 May, if assessed on Wednesday 1 April).

Complete declaration of compliance after staging 5 months after staging / duties start date

Complete declaration of compliance after re-enrolment 5 months after the 3rd anniversary of the staging / duties start date (or previous re-enrolment date)

Normal contribution payments to scheme provider 22nd day of the month following the month of deduction (19th day for non-electronic payments).

New member contribution payments to scheme provider (for all deductions made in first 3 months of membership)

22nd day (for electronic payments) of the first month, following a three month period starting the day active membership is effective (19th day for non-electronic payments) eg enrolments2 January to 1 February = e-payment deadline is 22 May.


Additional slides


Monitoring eligibility for automatic enrolment

• After the staging / duties start date, employers will have to assess, every

pay period, any worker who:

i. is not an active member of a qualifying pension scheme, and

ii. is not under postponement or the transitional period, and

iii. has not previously been automatically enrolled (or assessed as an

eligible jobholder whilst an active member of a qualifying schemeϮ).

• Workers assessed as an eligible jobholder would then need to be

automatically enrolled (or postponed).

• Those workers that do not fall into the above category should be left until

the next cyclical re-enrolment date (see slide on cyclical re-enrolment).

Ϯ A worker who has simultaneously been an eligible jobholder and an active member of a qualifying

scheme since the later of:

• the employer’s staging / duties start date; or

• the date they started work for the employer; or

• the last day of postponement.


• It is the employer’s responsibility to choose a pension scheme for their

workers.

• Employers should consider what features are important for their workers,

for example:

– charges (there is an annual 0.75% charge cap on the default fund)

– choice of funds other than the default strategy (eg Sharia,ethical)

– options at retirement and/or from age 55 (eg drawdown options)

– whether they provide ‘one pot per member’ and rules on transfers

– how tax relief is applied (eg through payroll or by the pension provider)

– online member services

– member communications (may be available in multiple languages)

• For help on how to select a qualifying pension, please see:

www.tpr.gov.uk/choosing-a-pension-scheme.aspx

Choosing a new pension - factors to consider


2017 AE review - key findings

DM 6031012 v2L These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

automatic enrolment in 2018/19 - the pensions regulator€¦ · quarterly forecast of employers due...

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