common challenges - live group · automatic enrolment webinar common challenges the information we...

NOV2015WEBINAR These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Automatic enrolment webinar

Common challenges

The information we provide is for guidance only and

should not be taken as a definitive interpretation of the law.

Neil Esslemont

Head of industry liaison

Rebecca Woodley

Industry liaison manager

23 November 2015


Welcome

• We are aiming this webinar at accountants, bookkeepers, financial advisers

and payroll providers.

• Today we will:

− provide a summary of what has happened so far

− explain our latest research and how it may affect you

− show you and your clients where to find help

− highlight the key compliance challenges and offer you solutions and tips

− show you how to help a client who has made a mistake and has not fully

complied with their duties

− highlight factors to consider when supporting your clients


The story so far

More than

67,000

employers have

automatically

enrolled their

staff

Approximately

100,000

employers to

stage in the

first three

months

of 2016

There are over

5.5 million

people enrolled

into automatic

enrolment

pension schemes


Challenges ahead

(excludes those without

eligible jobholders and

employers with no workers)

Very large volumes staging

from January 2016

* Based on age and earnings

data from HMRC

We estimate* that 65% of

employers yet to stage will have

full automatic enrolment duties


What we know

• Over 50% of micro employers staging

next year have not started making

plans for automatic enrolment.

• Many will leave their preparations to

the last minute.

• You may wish to proactively contact

your clients to confirm when their

duties start.


Support for employers: step by step guide1


Duties checker: before you begin


Support for business advisers


Employer duties: where can or will you help?

Checking your client’s start (staging) date

Being a point of contact

Checking who to put into a pension scheme

Creating your client’s action plan

Working out your clients costs

Checking records and payroll processes

Choosing a pension

Assessing and enrolling staff

Writing to your client’s staff

Completing the declaration of compliance

Knowing your client’s ongoing duties


Compliance challenges, solutions and tips

• Staging dates

• Who to put into a pension scheme

• Postponement

• Choosing a pension scheme

• Declaration of compliance

• Putting it right


Staging dates: how you can help your clients

• Do your clients understand:

– it is only the PAYE references they were using on

1 April 2012 that affect their staging date

– what to do if they have more than one PAYE scheme

– if they have two dates (one for each PAYE), they use

the earliest date not both (they only have one overall staging

date - not one per PAYE)

• All clients, including those who set up their business after

1 April 2012, can find their staging date by using our

Duties Checker tool.


Who to enrol: some common myths

• Do your clients understand:

– that automatic enrolment can affect people who are

NOT employees and are not on the payroll?

– the director exemption?

– how they can tell us they are not an employer?

– when a member of staff could trigger automatic enrolment?


Who to enrol: who do the AE duties apply to?

• A person who works (or ordinarily works) in the UK is likely to be subject to

the automatic enrolment legislation if they :

either work under a contract of employment (an employee)

or are a personal services worker, meaning they:

a) have a contract to perform work or services personally*

and

b) are not undertaking the work as part of their own business

• It makes no difference if they are full or part-time, permanent or temporary.

* ie they cannot freely send a substitute or sub-contract the work, unless they are unable to perform the

work themselves (eg due to sickness)


Who to enrol: are they a personal services worker?

• The employer needs to judge whether or not an individual (who is not a director)

with a contract to perform work or services personally* is undertaking

the work as part of their own business.

• Does the employer:

– have control over an individual’s method of work (eg hours worked)?

– provide any employee benefits?

– bear all the significant financial risks in carrying out the work

(eg the worker is not financially responsible for their faulty work)?

– consider the individual to be part of their own organisation?

– provide what is required for the individual to carry out the work (eg tools)?

If most or all of the above are true, then it would be reasonable to consider

that they are not undertaking the work as part of their own business

– and they are a personal services worker.

• The list above is not exhaustive and an employer must take into account all

relevant considerations and make a reasonable judgement.

* ie they cannot freely send a substitute or sub-contract the

work, unless they are unable to perform the work themselves

(eg due to sickness)


Who to enrol: does this apply to directors?

• A director of a company would be excluded from the automatic

enrolment duties, unless

a) the individual works for the company under a contract of employment

and

b) there is at least one other person working for the company under a

contract of employment.

• A director who is not working under an employment contract is never

classed as a worker and therefore the duties don’t apply.

• The exemptions can apply to more than one director working for the

same company.


Who to enrol: tell us you are not an employer

If an employer receives a staging date letter from us and do not believe they are

an employer, they may use our online form if:

• it is a sole director company, with no other staff

• it is a company with more than one director, where no more than one

director has an employment contract

• the company has ceased trading*

• the company has gone into liquidation or has been dissolved**

X it is not for employers who have no staff to enrol on their staging date

X it is not for companies in administration or in non-terminal insolvency

They will need their PAYE reference and letter code to complete the form.

https://automation.thepensionsregulator.gov.uk/notanemployer

Let us know if circumstances change, as automatic enrolment duties may apply.

* for partnerships, non-UK companies or individuals who stop employing workers

** a UK Companies House number must be provided

https://automation.thepensionsregulator.gov.uk/notanemployer

DM2750193 v4Y These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Who to enrol: what earnings trigger automatic enrolment?

2015- 2016*

† For other PRP durations, multiply the number of weeks in the PRP by the weekly amount (eg £192.00)

or number of months by the monthly amount (eg £833.00) etc - or pro-rata if not an exact multiple of any of

the above.

* N.B. The Secretary of State will review these figures each tax year.

Pay reference period/cycle

†Lower

level of qualifyingearnings

Earnings trigger for automatic enrolment

Upper level of qualifying earnings

Annual £5,824 pa £10,000 pa £42,385.00 pa

Bi-annual £2,912.00 £4,998.00 £21,193.00

1 quarter £1,456.00 £2,499.00 £10,597.00

1 month £486.00 £833.00 £3,532.00

4 weeks £448.00 £768.00 £3,261.00

Fortnight £224.00 £384.00 £1,631.00

1 week £112.00 £192.00 £815.00


Myths around postponement

• Do your clients know that when they use postponement:

– the staging date stays the same?

– the declaration of compliance date stays the same?

– they must notify any postponed member of staff within

six weeks of the start of postponement?

– the member of staff can choose to opt in to your client’s

pension scheme during the postponement period?


Postponement: when can it be used?

• Postponement can be used:

– at the employer’s staging date for any or all existing staff members

– on the date a member of staff triggers automatic enrolment

– on the first day of employment for any new joiner after the staging date.

• Each member of staff can be postponed from one day up to maximum

of three months.

• The employer may with to use postponement:

– to delay the assessment of staff until a more convenient date, such as

the start of a tax month or week, or

– for seasonal or temporary staff members who may leave in the next 3

months.


Challenges around choosing a pension

• Do your clients know:

– if their existing pension scheme can be used for

automatic enrolment

– where to start looking when choosing a pension

scheme?

– what factors to consider when choosing a pension

scheme?

– they should check their payroll software works with

their pension provider?

– that it’s a good idea do a test payroll run before their

staging date?


Choosing a new pension: where to start

• The government scheme

– National Employment Savings Trust (NEST) is a pension scheme that all

employers can use to meet their duties.

• Schemes with master trust assurance

– the master trust assurance framework provides an independent review

against an industry-wide benchmark of quality

– these features in our DC code represent the standards of governance and

administration that we expect trustees to attain

– we list those schemes that have said they’re open to all small employers

looking for a scheme provider for automatic enrolment.

• Schemes listed by other industry bodies

– Pensions and Lifetime Savings Association (PLSA) Pension Quality Mark.

– The Association of British Insurers (ABI) list of GPP providers.


Declaration of compliance: myths and tips

• Do your clients know:

– they do have to complete their declaration even if

they have no one to automatically enrol?

– registering for the online gateway is not the same

as completing your declaration?

– the declaration should not be completed before all

postponements have come to an end?

– if they do not complete their declaration within 5 months

of their staging date they may get a fine of £400?

– they should check if you or another business adviser is

completing the declaration for them?

– the online process can be started early and the

declaration partially completed?


• Tell us about the mistake.

• Our approach is that an employer should take reasonable

steps to put the staff member back in the position they would

have been in if they had complied on time. That means

the employer should:

– put the members of staff into their scheme, backdated to the

staging date, and

– ensure backdated employer pension contributions are paid, and

– ensure backdated staff pension contributions are collected

• If we decide to take formal action against the employer and the

staff member should have been put into the pension scheme more

than 3 months ago, we have the power to:

– require the employer to pay both their own and staff contributions, and

– require interest to be added to outstanding contributions

Putting it right: what if your client makes a mistake?


Useful links

Step by step guide for employers – www.tpr.gov.uk/en/employers

Online guide for business advisers – www.tpr.gov.uk/business-advisers

Staging dates – www.tpr.gov.uk/checking-your-clients-staging-dates

Who to put into a pension scheme – www.tpr.gov.uk/checking-who-to-enrol

Not an employer? – https://automation.tpr.gov.uk/notanemployer

Choosing a pension scheme – www.tpr.gov.uk/choosing-a-pension-scheme

Declaration of compliance – www.tpr.gov.uk/completing-the-declaration-of-compliance

Your role – www.tpr.gov.uk/what-you-need-to-do-and-by-when

News by email – https://forms.thepensionsregulator.gov.uk/subscribe

Find a letter code online – https://automation.thepensionsregulator.gov.uk/LetterCode

http://www.tpr.gov.uk/en/employers

http://www.tpr.gov.uk/business-advisers

http://www.tpr.gov.uk/checking-your-clients-staging-dates

http://www.tpr.gov.uk/checking-who-to-enrol

https://automation.tpr.gov.uk/notanemployer

http://www.tpr.gov.uk/choosing-a-pension-scheme

http://www.tpr.gov.uk/completing-the-declaration-of-compliance

http://www.tpr.gov.uk/what-you-need-to-do-and-by-when

https://forms.thepensionsregulator.gov.uk/subscribe

https://automation.thepensionsregulator.gov.uk/LetterCode


We are here to help!

Request a guest speaker:

https://secure.thepensionsregulator.gov.uk/speaker-request.aspx

Contact us at:

www.tpr.gov.uk/contact-us.aspx

Thank you

The information we provide is for guidance only and should not

be taken as a definitive interpretation of the law.

https://secure.thepensionsregulator.gov.uk/speaker-request.aspx

http://www.tpr.gov.uk/contact-us.aspx

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