Auto EnrolmentFebruary 2015

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Financial Planning and Wealth Management Business

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Auto-Enrolment

• The process of automatically enrolling employees into a qualifying workplace pension or similar scheme has begun.

• The largest UK Employers are now past their staging dates having auto enrolled all non pension scheme workers.

• SME’s to auto enrol over the next 12 to 18 months.

Auto-Enrolment

• Auto Enrolment is less about pensions and more about business planning, processes and systems

• Planning ahead is essential

• If you have less than 6 months until staging and have not started planning immediate action is required

What will employers have to do?

Employers will be required by law to:

• Set up & register a suitable pension scheme.

• Provide Pension/Auto-Enrolment information to employees.

• Enrol all eligible employees into a qualifying scheme.

• Confirm all relevant steps taken to The Pensions Regulator.

• Pay contributions for all eligible employees, unless they choose to opt-out of the scheme.

When will this affect employers?Every employer has been allocated a ‘Staging Date’, when they must comply with the new legislation.

The key Staging Dates have been amended slightly with a delay for employers with less than 50 workers.

You can find your staging date via http://www.thepensionsregulator.gov.uk/employers/tools/staging-date

Employer PAYE Size (April 2012) Staging Date

350 to 499 01 January 2014

250 to 349 01 February 2014

160 to 249 01 April 2014

90 to 159 01 May 2014

62 to 89 01 July 2014

61 01 August 2014

60 01 October 2014

59 01 November 2014

58 01 January 2015

54 to 57 01 March 2015

50 to 53 01 April 2015

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PAYE scheme size or reference Staging date PAYE scheme size or reference Staging date

Less than 30 with PAYE no. 92, A1-A9, B1-B9, AA-AZ, BA-BW, M1-M9, MA-MZ, Z1-Z9, ZA-ZZ , 0A-0Z, 1A-1Z or 2A-2Z 01-Jun-15 Less than 30 with PAYE no. 38-46, 7A-7Z, O1-O9 or OA-OZ 01-Oct-16

Less than 30 with PAYE reference number BX 01-Jul-15 Less than 30 with PAYE no. 47-57, 8A-8Z, Q1-Q9, R1-R9, S1-S9, T1-T9, QA-QZ, RA-RZ, SA-SZ or TA-TZ 01-Nov-16

40-49 01-Aug-15 Less than 30 with PAYE no. 58-69, 9A-9Z, U1-U9, V1-V9, W1-W9, UA-UZ, VA-VZ or WA-WZ 01-Jan-17

Less than 30 with PAYE reference number BY 01-Sep-15 Less than 30 with PAYE no. 70-83, X1-X9, Y1-Y9, XA-XZ or YA-YZ 01-Feb-17

30-39 01-Oct-15 Less than 30 with PAYE no. P1-P9 or PA-PZ 01-Mar-17

Less than 30 with PAYE reference number BZ 01-Nov-15 Less than 30 with PAYE no. 84-91, 93-99 01-Apr-17

Less than 30 with PAYE no. 02-04, C1-C9, D1-D9, CA-CZ or DA-DZ 01-Jan-16 Less than 30 unless otherwise described 01-Apr-17

Less than 30 with PAYE no. 00 05-07, E1-E9 or EA-EZ 01-Feb-16 Employer who does not have a PAYE scheme 01-Apr-17

Less than 30 with PAYE no. 01, 08-11, F1-F9, G1-G9, FA-FZ or GA-GZ 01-Mar-16 New employer (PAYE income first payable between 1 April 2012 and 31 March 2013) 01-May-17

Less than 30 with PAYE no. 12-16, 3A-3Z, H1-H9 or HA-HZ 01-Apr-16 New employer (PAYE income first payable between 1 April 2013 and 31 March 2014) 01-Jul-17

Less than 30 with PAYE no. I1-I9 or IA-IZ 01-May-16 New employer (PAYE income first payable between 1 April 2014 and 31 March 2015) 01-Aug-17

Less than 30 with PAYE no. 17-22, 4A-4Z, J1-J9 or JA-JZ 01-Jun-16 New employer (PAYE income first payable between 1 April 2015 and 31 December 2015) 01-Oct-17

Less than 30 with PAYE no. 23-29, 5A-5Z, K1-K9 or KA-KZ 01-Jul-16 New employer (PAYE income first payable between 1 January 2016 and 30 September 2016) 01-Nov-17

Less than 30 with PAYE no. 30-37, 6A-6Z, L1-L9 or LA-LZ 01-Aug-16 New employer (PAYE income first payable between 1 October 2016 and 30 June 2017) 01-Jan-18

Less than 30 with PAYE no. N1-N9 or NA-NZ 01-Sep-16 New employer (PAYE income first payable between 1 July 2017 and 30 September 2017) 01-Feb-18

Staging dates cont.

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Capacity Issues?

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Auto-Enrolment: The First Steps• Assess your workforce (working or ordinarily working in the UK).

(HR/Legal ) Argentis can help

• Determine what contribution basis will be used. (Finance/HR) Argentis can help

• Determine what qualifying pension scheme(s) will be used. (Finance/HR/Payroll) Argentis can help

• Establish the auto-enrolment process.(HR/Legal/Payroll/Finance) Argentis can help

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Assess the workforce

Earnings 16-21 22-SPA SPA-74

Under £5,772Entitled worker

(£481 pm)

£5,772 to £10,000Non-eligible jobholder

(£481 to £833 pm)

Over £10,000 Non-Eligible Jobholder

Eligible jobholderNon-Eligible Jobholder(over £833pm)

Auto Enrol? Can Opt-in/Join?Employer

Contribution

Eligible jobholders ü ü üNon-Eligible jobholders û ü üEntitled Workers û ü û

How much will this cost?The minimum contributions paid to a qualifying scheme is being phased in as follows:

Staging DateSeptember 2017

October 2017 toSeptember 2018

October 2018 onwards

Total Minimum Contribution

2% 5% 8%

Employer Minimum Contribution

1% 2% 3%

Employee Contribution 1% 3% 5%

The minimum contributions are a % of band earnings between £5,772 and £41,865 (known as, ‘Qualifying Earnings’) for 2014-15.

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TIER ONE, TWO & THREE CAN BE PHASED

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Staging Date toSeptember 2017

October 2017 toSeptember 2018

October 2018 onwards

Qualifying Earnings £5,772-£41,865

1% employer

1% employee

2% employer

3% employee

3% employer

5% employee

Tier 1 – basic salary 2% employer

1% employee

3% employer

3% employee

4% employer

5% employee

Tier 2 – basic salary (85% rule)

1% employer

1% employee

2% employer

3% employee

3% employer

5% employee

Tier 3 – total earnings

1% employer

1% employee

2% employer

3% employee

3% employer

4% employee

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Postponement of Auto Enrolment?

• Postponement enables employers to delay Auto Enrolling some or all eligible employees by up to 3 months.

• So if the Staging Date is 1 April 2015, Postponement can be any length of time up until 1 July 2015.

• Postponement can help employers manage short-term contract or temporary staff and those that have a ‘spike’ in earnings, or, to align with payroll processes.

• Simplicity is often the best strategy, but you can have different dates for different workers.

• All you need to do is send a postponement notice to each individual within 6 weeks of staging (or joining), ensuring that all of the relevant information is included.

What must employers not do?

• Offer Advice

• Discourage Membership

• Encourage jobholders to opt out

• Distribute the Opt Out form

• Use ‘prohibited recruitment conduct’ carries Fixed Penalty Fines ranging from £1,000 - £5,000

• Create barriers to the auto-enrolment process

Doing nothing is not an option!Fines from the Pensions Regulator

Stage 1 – A compliance / unpaid contribution notice Will require remedial action within set timescale

Stage 2 – Fixed Penalty of £400Notice will include requirement to put right the breach

Stage 3 – Escalating daily penalties

Number of Persons Prescribed Daily Rate

1-4. £50

5-49. £500

50-249 £2,500

250-499 £5,000

500+ £10,000

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Auto Enrolment challenges• Dealing with initial and ongoing assessment of workforce

• Providing statutory notices to jobholders at Staging and each pay reference period thereafter • notice to entitled workers about the ability to opt in• notice to non eligible workers about the ability to opt in and receive

an employer contribution• notice to eligible jobholders that they will be auto enrolled• Postponement notice if applicable

• Arranging payment of the contributions correctly and on time

• Dealing with Opt Outs, Opt Ins

• Dealing with re enrolments (every 3 years!!)

Typical Data Requirements for Auto Enrolment SystemsTitle In Scope of AE Pay DateFirst Name Telephone No Total Assessment EarningsLast Name Email Address Total Pensionable EarningsBirth Date Contractual Scheme Join Date Employer Contribution PercentageGender Requested Scheme Join Date Employee Contribution PercentageNI No. Opt Out Date Employer Regular Contribution AmountNationality Members Cessation Date Employee Regular Contribution AmountAddress Line 1 Deceased Date Employer Single Contribution AmountAddress Line 2 Employment Terminated Date Employee Single Contribution AmountAddress Line 3 Pension Provider Working Group Address Line 4 Employment Start DatePostcode Pay Group

Need to consider if this information is up to date, correct and easily assessable.

Act now (at least 6 months before your Staging Date)?

•Know your staging date

•Assess your workforce

•Review existing arrangements

•Analyse the contribution options

•Make the high level commercial decisions

• contribution basis and phasing• categories of workers

Argentis can help by providing an initial workforce assessment report

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Act now (at least 6 months before your Staging Date)?

Once the high level decisions have been made

• Decide on a suitable pension provider

• Establish processes between payroll, provider and employer to successfully deliver AE

• Employee engagement and communication strategy

Argentis can provide advice in all these areas

The Pensions Regulator www.thepensionsregulator.gov.uk

The information contained within this presentation is based on our understanding of present law and HM Revenue and Customs practice, which may be subject to change. The value of any tax benefits depends on individual circumstances.

This presentation is directed at professional advisers only. It should not be distributed to or relied upon by private investors.

A recommendation to invest should not be made on the basis of this presentation alone.

The value of an investment can fall as well as rise. If investments are encashed in the early years the investor may get back less than the amount originally invested.

Argentis Financial Management is authorised and regulated by the Financial Conduct Authority. The Financial Conduct Authority does not regulate tax and trust advice.

Important Information