This document discusses how auto-enrollment affects employers and their pension schemes. It outlines the staging dates when employers must comply with auto-enrollment based on company size. It explains what makes a pension scheme qualifying, who is eligible, and how contributions will be phased in over time. It also covers simplified certification options, opting out procedures, enforcement by regulators, and ways employers can fund auto-enrollment requirements more efficiently such as through salary sacrifice arrangements.

1. Auto Enrolment How Does This Affect You ?
Colin Walker
Independent Financial Advisor

2. Today we will look at
∗ Employer Awareness
∗ What’s happening and when?
∗ Preparing for Automatic Enrolment
∗ When do I have to have my scheme in place?
∗ What makes a scheme qualifying?
∗ Who is eligible for Automatic Enrolment?
∗ Contributions – phasing In

3. Today we will look at
∗ Simplified Certification Options
∗ Opting Out
∗ Additional Requirements
∗ Enforcement
∗ Employers- who deals with Auto Enrolment
Issues?
∗ Is there anything I can do to fund this more
efficiently?

4. Employers awareness of
Automatic Enrolment
Employers with no existing pension scheme: responses to
Automatic Enrolment - NEST
Auto-Enrol into an Employer scheme:
76% Unlikely
8% Likely
3% Highly Unlikely
Auto-Enrolment into NEST:
66% Unlikely
7% Likely
18% Highly Unlikely
9% Unsure
Source: ACA survey of smaller firms views on Auto Enrolment And NEST 2011

5. What’s Happening And When?
∗ Auto Enrolment October 2012- September 2017
∗ Staging date depends on employer size, but can be
brought forward
∗ Employer must enrol eligible employees (job holders
into qualifying Scheme)
∗ Provide information to all employees
∗ Eventually required to pay 3% of qualifying earnings
(minimum 8% overall)
∗ Register with TPR and keep records
∗ 4-8 million new savers in workplace from 2012
∗ Additional £10bn-15bn annual savings by 2050

6. Preparing for Automatic Enrolment
Employer-no scheme Employer-with scheme
∗ Find out Staging Date ∗ Find out Staging Date
∗ Assess the workforce ∗ Assess the workforce
∗ Determine earning definitions ∗ Review/determine earnings
∗ Calculate costs definitions
∗ Consider scheme type ∗ Calculate Costs
∗ Communicate to workers ∗ Review existing Scheme
∗ Plan implementation ∗ Consider scheme type
∗ Enrol eligible job holders ∗ Communicate changes/terms to
∗ Register with TPR & keep workers
records ∗ Plan implementation
∗ Contribute to workers ∗ Enrol eligible job holders
pensions ∗ Register with TPR & keep
records
∗ Contribute to workers pensions

7. When do I have to have my scheme in place?
Employer Staging Dates
Employer size Auto-enrolment staging date
PAYE scheme size Staging date
120,000 or more 1 October 2012
50,000-119,999 1 November 2012
30,000-49,999 1 January 2013
20,000-29,999 1 February 2013
10,000-19,999 1 March 2013
6,000-9,999 1 April 2013
4,100-5,999 1 May 2013
4,000-4,099 1 June 2013
3,000-3,999 1 July 2013
2,000-2,999 1 August 2013
1,250-1,999 1 September 2013
800-1,249 1 October 2013
500-799 1 November 2013
350-499 1 January 2014
250-349 1 February 2014
50-249 1 April 2014 to 1 April 2015
Test tranche <30 Employees 1 April 2015 to 30 June 2015
30-49 Employees 1 August 2015 to 1 October 2015
Less than 30 Employees 1 January 2016 t0 1 April 2017
New Employers 1 May 2017 to 1 February 2018
The rules for staging within each size grouping have still to be
confirmed.

8. What makes a scheme qualifying
∗ Does it permit Automatic Enrolment?
∗ Are employees enrolled automatically within 3
months of joining?
∗ Does the scheme have a “default” investment option?
∗ Recognising the likely characteristics & needs of
employees
∗ Appropriate balance between risk & return
∗ Glide path to safer assets as retirement approaches
∗ Does it meet one of the minimum contribution tests?
∗ Does it have an opting out facility?

9. Who is eligible for
Automatic Enrolment?
Assessing and categorising the workforce
2012/2013 levels
Qualifying Earnings
Age < £5,564 £5,564 - £8,105 > £8,105
16-21 Entitled Worker Non-eligible Non-eligible
jobholder jobholder
22-SPA Entitled Worker Non-eligible Eligible jobholder
jobholder
SPA-75 Entitled Worker Non-eligible Non-eligible
jobholder jobholder

10. Contributions – phasing in
Based on Qualifying Band Earnings
Steady State
Defined contribution 1% employee 3% employee 5% employee
contribution contribution contribution
Defined contribution 1% employer 2% employer 3% employer
contribution contribution contribution
Staging period
October 2012 October 2017 October 2018

11. Simplified Certification Options
Qualifying Earnings Definition (2012/13) – P60 income from £5,564 to £42,475
Employer minimum Minimum total
Full basic salary (pensionable pay) 4% 9%
Full basic salary, and at least 85% of 3% 8%
total pay is pensionable
Total earnings (p60) 3% 7%
Employer industry & demographic will drive decisions

12. Opting Out
Opting out 1 month Opt Fill in Refund Inform Refund
Engage Your Window out Notice Worker Provider Employer
workforce Notice
Review 1 month Opt out Fill in Refund Inform Refund
Engage your Window Notice Notice worker Provider Employer
Workforce
Default ‘re-enrolment date’ is 3rd anniversary of Employer staging date every
3 years.

13. Additional Requirements
All Employers will have additional regulatory
requirements
∗Employers prohibited from incentivising opt outs
∗Register with TPR to show they are meeting their
duties
∗Payments will be monitored by Administrators or
Scheme Trustees who need to report failures
∗Must keep records for 6 years
∗Must retain Opt in & Opt Out notices for 4 years

14. Enforcement
Fines from the Regulator
Stage 1 - A compliance/unpaid contribution notice
Stage 2 - Fixed penalty of £400
Stage 3 – Escalating daily penalties
Number of Persons Prescribed daily rate
1-4 £50
5-49 £500
50-249 £2,500
240-499 £5,000
500+ £10,000

15. Employers – Who Deals With Auto
Enrolment Issues?
Number of Employees
Pensions Dept/Human
large Resources
medium
? ‘Payroll’
small
Organisation

16. Is there anything I can do to fund this
more efficiently?
“…the overarching view is that salary
sacrifice is here to stay, and will prove to
be a valuable tool for advisers looking to
manage the transition to auto
enrolment.”
Source: Corporate Adviser – September 2010

17. Questions