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When? • Auto-enrolment introduced gradually - larger
employers first; smaller employers later
• ‘Staging date’ determined by number of people in employer’s PAYE payroll scheme on 1 April 2012
• See www.tpr.gov.uk/staging
• Employers can bring staging date forward
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Who?
1. Enrol “eligible jobholders” automatically into an automatic enrolment scheme
2. Pay minimum DC contributions or provide minimum DB benefits
3. Re-enrol eligible jobholders who opt-out approx every 3yrs
4. Keep records
5. Not induce opt-outs
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Waiting period - postponement
• Employers can operate waiting period of up to 3 months by giving notice (within 1 month)
• May help with:– casual/seasonal workers– temporary workers– quick leavers– alignment of auto-enrolment with payroll
• Jobholders’ right to opt-in
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Summary of worker categories
Earnings Age 16-21 Age 22-SPA SPA- age 75
£8,105 or more
Non-eligible jobholder – may opt-in to an automatic
enrolment scheme
Eligible jobholder – must
be auto-enrolled into an automatic enrolment scheme
Non-eligible jobholder –
may opt-in to an automatic enrolment scheme
£5,564 - £8,105
Non-eligible jobholder – may opt-in to an automatic enrolment scheme
Less than £5,564
Entitled worker – can request to join a pension scheme (but it does not have to be a qualifying
scheme and not entitled to employer contributions)
What?
An automatic enrolment scheme:
• must be a qualifying pension scheme, and
• must not contain any provisions which:
– prevent the employer fulfilling its auto-enrolment and re-enrolment duties, and
– require a member to make a choice or provide information
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Types of worker• Agency workers• Casual workers/zero-hours contractors• Overseas workers• Consultants• Multiple contracts of employment• Fluctuating earnings
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Contractual enrolment
• Where employer enrols workers into a pension scheme pursuant to a contractual agreement
• Legal duty under s3 PA2008 does not apply, so:– no statutory right to opt-out– more limited information requirements
• Reduces need to treat different workers differently
• May work better with enrolling everybody
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Opting-out
• Eligible jobholders and non-eligible jobholders who opt-in can opt-out within 1 month and receive a refund of their contributions, but:– not before they have been auto-enrolled– opt-out paperwork must come from scheme– employer must not incentivise opt-outs– employers must re-enrol every 3 years
(within 6 month window)
• Can leave scheme after statutory opt-out window
• Beware workers with enhanced/fixed protection!
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Salary sacrifice
• Salary sacrifice arrangements can be continued
• Care needs to be taken to ensure that it is valid and implemented consistently with the employer’s automatic enrolment duties
• HMRC has issued guidance on opting out, and has confirmed there is no longer a requirement for the arrangement to be in force for 12 months
Things you need to do
• Check self –employed arrangements• Check agency / secondment agreements• Set up procedures to track variable earnings• Sort out approach on salary sacrifice / flex• Deal with enhanced / fixed protection workers• Allow lead times for contractual AE
Useful links
• The Pensions Regulator’s ‘Pensions reform & auto-enrolment’ homepage - http://www.thepensionsregulator.gov.uk/pensions-reform.aspx
• The Pensions Regulator’s detailed auto-enrolment guidance - http://www.thepensionsregulator.gov.uk/pensions-reform/detailed-guidance.aspx
• The Pensions Regulator’s ‘Staging date timeline’ - http://www.thepensionsregulator.gov.uk/pensions-reform/staging-date-timeline.aspx
• The Pensions Regulator ‘How to bring your staging date forward’ - http://www.thepensionsregulator.gov.uk/pensions-reform/bringing-staging-date-forward.aspx
• Follow us on twitter @pensionlawyers and @ready2autoenrol
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