Slides from Mitchell Charlesworth Workplace Pension Seminar 22 November 2016

1. www.mitchellcharlesworth.co.uk
Workplace PensionReforms &
Auto-Enrolment
A Brief Guide for Employers
November 2016

2. Employers Legal Duties
Implement a QualifyingWorkplace Pension Scheme
Automaticallyenrol alleligiblejobholders
Allow non-eligiblejobholders to opt In and entitledworkers to join
Facilitateopt outs withinthe opt out period and refund contributions
Maintaincontributions
Automaticallyre-enrol all eligiblejobholders every three years
Keep records
Communicateappropriateinformation to workers on a timely basis
Register Pension Scheme with Pension Regulator

3. What is a qualifying pension scheme?
A UK pension scheme is a qualifyingpension scheme if it's a registered pension scheme that meets
certain qualitystandardsit must:
• Be able to accept members by auto-enrolment; and
• Have a default contribution basis; and
• Have a default investmentoption; and
• Maximum of 0.75%pa management charge

4. How much must be paid to a money
purchase pension scheme to meet the
qualifying standard under workplace
pension reform?
For a money purchase pension scheme to be a qualifyingpension scheme it must receive a minimum
level of contribution
Contributionsare calculatedon “banded earnings”
2016/17 Banded Earningsare between £5,824 to £43,000
Frequently calledthe “standard qualitytest”

5. Standard quality test
Once fully implemented, a total minimum contribution of 8% of qualifying earnings
(including an employer contribution of at least 3%) will be needed in each relevant pay
reference period to meet the standard quality test.
However, the minimum contribution needed is being stepped-up in phases, as follows:
Contribution phasing period
*Dates subject to parliamentary approval
Minimum
employer
contribution
Minimum total
contribution
(gross)
Phase 1 Staging date – 5th April 2018* 1% 2%
Phase 2 6th April 2018 – 5th April 2019* 2% 5%
Phase 3 April 2019* 3% 8%

6. What can I expect it to cost me?
Certain assumptions:
• Assume all workers are assessed to be EligibleJobholders
• Assume that the standard quality test for assessmentof income applies
• Aged 22 – State Pension Age
• Earningsover £10,000 pa
• Bands earningsas: £5,824 - £43,000
• Workings based on 2016/17 bandingsand rates
NB: Earning Figures are pro-rated for shorter pay reference periods

7. Indicative costs for a single employee
with different earnings and how
payments will change 2016/17TaxYear
Annual Gross Pay £15,824 £25,824 £45,824
Band earnings PA £10,000 £20,000 £37,176***
Contributions ER* EE** ER* EE** ER* EE**
Now 1:1 £8.33 £6.66 £16.67 £13.34 £30.98 £24.78
April 2018: 2:3 £16.67 £20.00 £33.33 £40.00 £61.96 £74.35
April 2019: 3:5 £25.00 £33.34 £50.00 £66.66 £92.94 £123.92
*Employer contributions will be an allowable deduction for corporation tax relief purposes
**Employees receive tax relief to their highest marginal rate, these are net of basic rate tax
***As Band Earnings are between 5,824 and 43,000 maximum pensionable is 37,176
Examples based on a Monthly Payroll

8. Alternative quality tests
An employer can certify that their scheme is a qualifying scheme if it passes any
of the Alternative Quality Tests based on the scheme's usual pensionable pay
definition (and passes other criteria)
Contribution levels on Alternative Quality Tests result in higher contributions as
rates are higher and do not disregard the first £5,824 under banded earnings.
Comparative quality test percentages as at phase 3, April 2019 below;
Test Pensionable Pay Minimum
employer
contribution
Minimum total
contribution
(gross)
Comment
Standard Banded Earnings £5,824 - £43,000 3% 8% Usually lowest cost owing
first £5824 ignored
Alternative 1 Basic Pay Only 4% 9%
Alternative 2 Minimum of 85% Total Pay 3% 8% Difficult to monitor
Alternative 3 Total Pay 3% 7%

9. When will it apply to a business?
Thiswill applyto allemployers in the UK
The new employer dutiesare being introduced from 1 October 2012 to 1 February 2018. The staggered
introduction of these dutiesis known as staging.Broadly speaking,the new dutieswill applyto the
largest employers first,with some of the smallestemployers not being affected until2017.
Each employer's stagingdateis based on their PAYE records as at 1 April 2012 - if an employer has more
than one PAYE scheme, their stagingdateis set by the largest scheme.
Regardless of size, employers who start tradingfrom 1 April 2012 to 30 September 2017 will be in one
of the laststaginggroups.
The Pensions Regulator willwrite to each employer at least 12 months before their stagingdate to tell
them about their duties.
Letters issued at present advisingemployer to nominatea contact with The Pensions Regulator

10. Who will be Auto-Enrolled?
Category of Workers for Auto-Enrolment
Qualifying Earnings Age
16-21 Age group
22 to State Pension
Age
State Pension Age
to 74
£0 to £5,772 Entitled Worker
£5,772 up to £10,000 Non Eligible Jobholder
Above £10,000
Non-Eligible
Jobholder
Eligible Jobholder
Non-Eligible
Jobholder
QualifyingEarningstypicallyincludes Salaries,Wages, Overtime, Commission, SSP, SMP and more
EligibleJobholders are enrolled, the other workers can ask to join.
Those with enhanced or fixedprotection (2012 or 2014) should opt-out of auto-enrolment to ensure
their protection isn't lost

11. Postponement
Postponement can be useful where you want to aligninternalprocesses;
• New employee probationary periods
• Financial periods
• Payroll cut offs
Postpone a worker’s entry to Auto-Enrolment from 1 day up to 3 months
Notify postponed worker within 6 weeks
Worker has the right to Opt-In or Join during postponement
Employer must assess worker on lastday of postponement
Employers can not repeatedly postpone a workers assessment
Can the business’s systemsmonitor postponement dates?

12. Opting Out
Once enrolled, workers may decide to Opt Out
Employers must advise workers of the entitlementand the Opt Out process,
• Opt Out method determined by who the Pension Provider is
• Made by employees direct to Employer or Pension Provider
A one month Opt Out Window starts on the later of;
• When the worker becomes active member of the scheme
• When the employer issues a notice of enrolment to worker
If insidethe window, both worker and employer get a refund of contributions
If outside of the window, worker can Opt Out but no refunds are made
Early Opt Outs (before Opt Out Window starts) are not allowed

13. Employee Safeguards
Employers can not tell,payor induceworkers to Opt-Out
• Fixed Penalty:£400
• Escalatingpenalties:£50 - £10,000 a day
• Criminal prosecution: Up to 2 years in prison for repeated non-compliance
Employers must not imply during the recruitment process that applicantsmay be given the job based
on whether they will opt out of a workplace pension
• Prohibited Recruitment Penalty Notice: £1,000 - £5,000 for each instance
Refrain from givingfriendlyadvice to workers
• Refer them to the statutorycommunications

14. Employer Duties to Categorised Workers
Employer Duties
Eligible
Jobholder
Non-Eligible
Jobholder
Entitled Worker
Notify in writing of the scheme X X X
Automatically Enroll X
Inform worker of how to join the scheme X X
If the employer receives requests to join
scheme, the following also applies.
Keep records of enrolment or join
process
X X X
Process opt-out notice X X X
Employer contributes to scheme X X
Collect employee contributions X X X
Pay combined contributions to Pension X X X
How will you organise and document employee communication?
Do you have software or a provider that handles some or allof these processes?

15. Communication
Potentiallythere is a lot of communicationto issue to workers both initiallyand ongoing;
Employer Communication Duties How Often Time Limits
Write to workers in existing qualifying
workplace pension scheme (QWPS)
Initial but Optional
Suggest within 2 months of your
staging date
Notify workers not in QWPS in writing of
your Auto Enrolment scheme
Initial and Ongoing
Within 6 weeks of your staging date or
the worker’s start date
Notify relevant workers where a
Postponement period has been applied
Initial and Ongoing
Within 6 weeks of your staging date or
the worker’s start date
Inform relevant workers of how to join the
scheme early
Initial and Ongoing
Within 6 weeks of your staging date or
the worker’s start date
Notify a worker of their enrolment and
how to Opt Out
Ongoing
Within 6 weeks of enrolment (ideally,
4 days after Pension Provider notified)
Different pension providers handlesome, allor none of the communications
Payroll software may be able to provide basicworker communication

16. Assessment and Reassessment
After you have staged,each subsequent pay period requires you to:
Re-assess Non-EligibleJob Holders and EntitledWorkers
Assess New Employees (or postpone assessment for up to 3 months)
Assess workers who have passed their postponement date
Process Non-EligibleJob Holders and Entitled Workers Opt-In Notices
Process Opt-Outs Notices and administerany relevant refunds
Every 3 years, reassess workers (mainlyto identifyOpt Outs)
Remember: Issue any associatedcommunications to relevant workers

17. Payroll is Key to Auto-Enrolment
Good Payroll software should have some level of Auto-Enrolment functionality
Assessing workers by calculating;
• An employee’sage
• Their earnings bracket based on the pay in that period
Capableto applymultiplerules to;
• Handle multiple pension schemes,
• Add a relevant pension scheme detailsto the correct employees
• Apply the calculationsto employees earnings during the payroll
Payroll software may even;
• Generate basic worker communication
• Generate filessuitable for upload to some Pension Providers

18. Maintain Contributions
After each pay run you will have to provide contributions details to your Pension Provider
Pension Providers do not have a common file format that they allsupport
Good Payroll software will be able to generate files for upload with some of the most popularAuto
Enrolment Pension Providers
• Establishthe file format the provider requires early on
• Establishif Payroll Software willmeet that requirement
• Establish timescalesand additional costs
From thisupload some Pension Providers may issue worker communication
• Communication from only the Pension Provider may be insufficient
If your provider does not handlecommunication,establishhow Payroll software can help.

19. Capacity Crunch come 2017.
Many employers will be looking for a
Workplace Pension at the same time.
0
20
40
60
80
100
120
140
Example : Numbers of Employers Staging by Month
Employers Staging

20. Penalties if employers don't meet their
obligations under workplace pension
reform
A compliancenotice requiring them to put matters right within a set timescaleor an unpaid
contributionsnotice requiring them to make good arrears of contributions.The notice can also require
the employer to pay interest of up to 4.2% above inflationon the unpaidcontributions.
If contributionsare overdue by three months or more, the Pensions Regulator can make the employer
meet the cost of both their own and the jobholders' contributions.
If these notices aren't complied with, the Regulator can levy a series of fixed rates fines, dailypenalty
notices potentiallyleadingto imprisonment;
Fixed penaltyof £400 for non complianceor latecompliance. Further instances;
£50 per dayfor firms with 1-4 employees
£250 per day for 5-49 employees
£2,500 per day for firms with 50-250 employees
CivilPenaltiesfor failingto pay contributions to the Pension Provider
£5,000 per individualor £50,000 per organisation
Up to 2 year imprisonment

21. What will happen first?
The Pensions Regulator has issued letters for employers staging for the employer to nominate a
contact.
We recommend the employer nominatesomeone at their organisation
• It willensure the employer receive updates on Auto Enrolment
The employer should look to form an Auto-Enrolment Action Plan as soon as possible

22. Auto-Enrolment Action Plan
Check your StagingDate;
• Visitwww.thepensionsregulator.gov.ukand enter your PAYE reference to obtain your staging
date
Ensure you have a qualifyingscheme;
• Speak to a reputable Financial Advisor to see if any existing scheme meetsqualifying criteria for
Auto Enrolment. Establishif you need to put another scheme in place.
Communicatechangeswith workers ahead of your StagingDate
• Your Financial Advisor or Pension Provider will have lotsof material for you hand out and place
around the workplace. Promote the changes as a benefit.
Check your systems;
• Speak to your Pension Provider, Payroll Team, HR and Finance before making any commitments.
Make sure you have a solutionsthat suits your business.

23. What happens when my employees leaves to
work somewhere else?
• Employeesmay continue to pay into the
pension scheme after leaving your
employment. Their new employer will
have their own arrangement.
How long do I need to prepare for Auto-
Enrolment?
• The Pension Regulator says 12 months
before your staging date. The earlieryou
prepare, the better.
Can MitchellCharlesworth handleAuto
Enrolment?
• Yes. We take a unified approach to our
services, offering a rounded solution.
I have very few employees. Surely, I will not be
affected?
• Every employer in the land is affected.
Even if your workers are under 22 earning
less that £10,000 you have an obligationto
communicate to workers to provide a
compliant scheme.
Are Company Directors Auto-enrolled?
• If one of two or more directors have a
contract of employment then they should
be treated as a worker. A contract of
employment can be implied.
All my workers have zero hours contracts, am I
excluded from Auto Enrolment?
• Enduring employee relationships are key
here. Staff may be considered workers
even if they are not carrying out work.
Frequently Asked Questions

24. Mike Wall
Financial Planner
Tel:01512552300
mike.wall@mitchellcharlesworth.co.uk
Advice & Services:
Ken Davies
DirectorofPayroll
Tel:01514237500
ken.davies@mitchellcharlesworth.co.uk
PayrollServices:
• Assessment,ContributionCalculation, Filesforupload toPension
Providers
• ProcessOpt-Outs, Joinnotices,handle multiple pension scheme
• Ongoing workercommunicationifrequired
• Contact KenDavies orJoanne Niemanat ourWidnes Officeon 0151 423
7500
FinancialServices:
• Bespokereview existing oridentifyexisting arrangementsforAE
suitability
• Workshopsforemployees,announcement communicationsto workers
• Researchthe wholeinsurancemarket place to identifya suitable pension
provider
• Contact Mike Wall orRichardPennat ourLiverpoolOfficeon0151 255
2300
The more complex the pension arrangement - the more complex the administration

25. www.mitchellcharlesworth.co.uk
Thank you
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