Auto enrolment: opportunity or threat?

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Auto enrolment opportunity or threat?Rob Walker 23rd October 2014

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• New government workplace pensions legislation

• Requires all employers with staff in the UK to provide a qualifying workplace pension scheme

• Implementation (staging date) is determined by the size of the employer’s largest PAYE as at April 2012

• Single shareholder companies, where the owner is also an employee, will also need to operate a scheme

• An eligible jobholder is any worker who ordinarily works in the UK and is aged between 22 and the State Pension Age, and earns over £10,000 a year.

• Eligible employees must be automatically enrolled

• Employees can opt-out

What is auto enrolment?

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Select a pension scheme provider Assessment of workers pre staging, at staging, ongoing Run opt-out / opt-in process and communications 3 year re-enrolment cycle Issuance of statutory postponement notices Issuance of statutory joining letters Record keeping for The Pensions Regulator requirements Reporting Submission of pension contribution information Administer refunds

Employer responsibilities

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Employer ResponsibilitiesSelect a pension scheme providerAssessment of workers pre staging, at staging, ongoingRun opt-out / opt-in process and communications3 year re-enrolment cycle Issuance of statutory postponement notices Issuance of statutory joining lettersRecord keeping for TPR requirementsReportingSubmission of pension contribution informationAdminister refunds

YOU, ADVISER, PAYROLL BUREAU,

ACCOUNTANT + NOW:PENSIONS

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What lies ahead?

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12,500 Stagers in July 2014

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60,000+ Stagers in July 2016

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Q1 2014

Q2 2014

Q3 2014

Q4 2014

Q1 2015

Q2 2015

Q3 2015

Q4 2015

Q1 2016

Q2 2016

Q3 2016

Q4 2016

0

50000

100000

150000

200000

250000

Staging volumes by quarter (financial year)

Employer staging forecast from The Pensions Regulator

215,000

110,000

27,400

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• Auto enrolment is complex, your clients will be turning to you for support – if you can’t help they will have to look elsewhere

• It is an opportunity to develop solutions for existing clients and attract prospective clients

•Minimise process interruptions and client anxiety

• Potential to increase commercials by demonstrating added value with managed service options

Why should payroll bureaux get involved in auto enrolment?

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Research

In June 2014 we conducted research with 65 payroll bureaux / accountants that offer payroll services on their approach to auto enrolment.

We questioned them on:

• Readiness for auto enrolment

• The level of service they’ll be offering

• Their auto enrolment concerns

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Do you / will you offer auto enrolment services to clients?

Research conducted online with 65 payroll bureaux / accountants that offer payroll services via Payroll World in June 2014.

0%

10%

20%

30%

40%

50%

60%

70%

60%

31%

2%8%

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Do you view auto enrolment as an opportunity or threat to your business?

Opportunity

Threat

Don’t know83%

11%6%

Research conducted online with 65 payroll bureaux / accountants that offer payroll services via Payroll World in June 2014.

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How do you see auto enrolment affecting your business?

Research conducted online with 65 payroll bureaux / accountants that offer payroll services via Payroll World in June 2014.

Growth opportunity

Client r

etention opportunity

Possibilit

y of lo

sing c

lients

Cost with

little benefit

Compliance

risk

Other0%

10%20%30%40%50%60%70%80%

68%

50%

10%

29%18%

3%

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What are your main concerns around auto enrolment?

0%5%

10%15%20%25%30%35%40%45%

31%

41% 41% 38%

28%

18%15%

Research conducted online with 65 payroll bureaux / accountants that offer payroll services via Payroll World in June 2014.

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Will you charge extra for these services?

Yes

No

Don’t know 81%

10%9%

Research conducted online with 65 payroll bureaux / accountants that offer payroll services via Payroll World in June 2014.

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Payroll community has a vital role to play in ensuring that auto enrolment remains on track

and under control

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The technical issues…

41% of bureaus surveyed said technical payroll issues were their main concern

BUT have no fear-many of these issues can be resolved by building payroll interfaces with pension providers who can support and assist bureaus.

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Pension providers

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Statutory Minimum Contributions

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Who we are – heritage and backing• NOW: Pensions is a UK multi-employer trust• The first UK master trust to be awarded Pensions Quality Mark READY

by National Association of Pension Funds

• Low cost operating model powered by robust technology• Subsidiary of ATP, Denmark’s leading pension provider

50 years experience

Award winning pension

fund

c£65bn FUM

C151,500 employersSource: ATP 2013 Annual Report

C4.8m members

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Wholly independent with a depth of experience to provide rigorous governance.

Nigel WatersonChair and formerShadow Pensions

Minister

Christopher DaykinThe Former

Government Actuary

Lord MonksMember of House

of Lords and Former General Secretary of ETUC and TUC

Win RobbinsFormer Head of European

Fixed Income, Barclays Global Investors and

Credit Suisse Asset Management

Jocelyn BlackwellFounder of Dunnet Shaw and Raising

Standards in Pensions Administration

Trustee Board – Master Trust governance

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• Non-selective – guaranteed acceptance, no minimum member numbers or contribution levels

• Online sign up – set up a scheme within minutes, no lead time required when using standard models

• Payroll – we can run alongside any existing arrangements and have collaborated with many payroll software providers

• Flexible – happy to support full or partial integration of our free middleware solution

• Support – pre-implementation support from a National Partnership Manager and implementation support from a highly experienced Client Support Team

• What will it cost? – zero, if you follow the standard process

We seek to remove the

delivery burden whilst ensuring compliance and a full audit trail

What we provideEmployer

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• Simple and straightforward auto enrolment pensionSimple, transparent charging structure

• Employees in control of their savings Personal member website* – current and projected valuation, transfers in and out, death benefit nomination, change in personal contribution rate

• Employee support Employee helpline and email mailbox to reduce pension queries to employer, tutorial videos for member website and opt-out

* Requires unique employee email address in first data file uploaded to Employer portal

What we provideEmployees

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NOW: Pensions – Bureau solutionWhat is it?

We have invested in the delivery of dedicated microsites for payroll bureaux

This will enable you to pass multiple files across with just one website log in rather than a log in per client

You will be able to select supportive services for your clients and consider appropriate charging tiers

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Time is money – how long will it take you?

Run payroll and create the worker categorisation file

Log on to the website

Upload data filesto pension scheme

Batch process pensions

Client By client process

= 4 hours*

= 50 hours*

*The above FTE assumes 200 payrolls to be processed within a pay frequency

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NOW: Pensions dedicated solution can help you add real value yet maintain efficiencies

4. Batched data

transfer

3. Simple data 2. Single login 1. Simple benefit

models

8. Reporting7. Control6. Administration5. Online sign up

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Default solution• Make things simple for

you and your client

• Reduce queries and deliver a defined solution for majority of clients

• Differentiate costs to drive clients to this solution

Options to working together

Proactive approach

• Non defined but differentiated pricing drives outcome

• Contribution and postponement options

Passive approach• Promote NOW: Pensions

and NEST as non-selective• Do you prescribe other

aspects? “Be aware: more decisions = more queries“

27

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Helpful collateral

Auto enrolment for payroll bureaux

An introduction to auto enrolment

About NOW: Pensions

Please click the images below to link to the literature

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Any questions?nowpensions.com0 333 33 222 22

NOW: Pensions is a UK occupational pension plan. Membership is only available through an employer. NOW: Pensions Limited, registered in England and Wales. Registered address: 3rd floor, 164 Bishopsgate, London, EC2M 4LX, UK. Our VAT number is 125511643.

This is written as a general guide only. It should not be relied upon as a substitute for specific professional advice. Please note past performance is not a guarantee of future returns.