tpr dm3184696 v6a these slides remain the property of the pensions regulator and their content...

TPR DM3184696 V6A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Neil EsslemontHead of industry liaison

Rebecca WoodleyIndustry liaison manager

November 2015

The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

Automatic enrolment

for business advisers


Content

• Automatic enrolment:

– Why was automatic enrolment introduced and what is the story so far?

– What are the employer duties?

• The challenges to come

• Support and information for employers and business advisers

• Your role as a business adviser: how you can help your clients

• Myth busting - testing your knowledge


Automatic enrolment

An introduction

• Why automatic enrolment was introduced and the story so far.

• The employer duties.


Under-saving and longer life expectancies

Past and predicted trends in the life expectancy period of 65 year old men and women in the UK as of 2004 and 2010

7 million people are

under-saving


What is automatic enrolment?

The law on workplace pensions has changed.

•Every employer with at least one member of staff has new duties, including putting those who meet certain criteria into a workplace pension scheme and contributing towards it.

•This is called automatic enrolment.

– It’s called this because it’s automatic for workers - they don’t have to do anything to be enrolled into a pension scheme.

– It’s not automatic for employers. They need to take steps to make sure staff are enrolled.


The story so far

More than67,000employers have automatically enrolled their staff

Approximately100,000employers to stage in the first three months of 2016

There are over5.5 millionpeople 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


Breakdown of small and micro employers due to stage by size

The need for a new approach

• Number of employers starting their AE journey reach unprecedented levels.

• Need to reach these large numbers with a relevant campaign to drive engagement.

• The “We’re all in” TV campaign was seen as ‘less relevant’ to small and micro employers, their staff and their business advisers.

• Many small/micro employers are ‘time poor’ and have limited financial knowledge.

“It would resonate more if there was a shot with a little shop with a few

people in it.” Employer


Language simplification

• The type of employer we are now engaging with has changed:

– small (6 - 30 staff) and micro (1 - 5 staff)

– around half will have just one or two members of staff

– less financial knowledge and time poor

– information needs to be concise and presented simply

– these sources are more likely to be general often via press and media.

• New content for employers - the changes are:

– buzzwords, jargon and acronyms avoided

– legal terminology kept to a minimum and clearly explained when used

– key terms and phrases replaced with simplified language.

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Automatic enrolment legislation gives employers a duty to: automatically enrol all eligible jobholders communicate to workers providing timely and appropriate information allow non-eligible jobholders to opt in and entitled workers to join manage opt outs within the opt out period and promptly refund contributions automatically re-enrol eligible jobholders every three years complete declaration of compliance with the regulator keep records make prompt payments of pension contributions

The employee safeguards state that employers: must not induce workers to opt out or cease membership of a scheme must not indicate to a potential jobholder that their decision to opt out will

affect the outcome of the recruitment process

Overview of legal duties and safeguards


Staging

• The employer duties apply to each employer from their staging (start) date:

– the duties apply to all of the employer’s workers from that date.

• An employer’s staging date will be based on the PAYE scheme or schemes that were being used on 1 April 2012.

– After 1 April 2012, any change to the PAYE schemes being used will have no effect on the staging date.

• However, new employers* will go last, from May 2017.

Oct 2012 May 2017April 2014 June 2015

Large employers

Medium employers

Small/micro employers

New* employers

Feb 2018

*Employers that did not exist (or were not using a PAYE)

as at 1 April 2012.

Do not assume your clients know their

staging date- check this on

our website

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Staging dates for new employers (post 1 April 2012)

PAYE income is first payable in respect of any worker Staging date

From 1 April 2012 up to and including 31 March 2013 1 May 2017

From 1 April 2013 up to and including 31 March 2014 1 July 2017

From 1 April 2014 up to and including 31 March 2015 1 August 2017

From 1 April 2015 up to and including 31 December 2015 1 October 2017

From 1 January 2016 up to and including 30 September 2016 1 November 2017

From 1 October 2016 up to and including 30 June 2017 1 January 2018

From 1 July 2017 up to and including 30 September 2017 1 February 2018


Who is subject to automatic enrolment?


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)


Is a director subject to automatic enrolment?

• A director of a company is not classed as a worker, unless

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

and

• 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

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

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Type of work contract between the individual and this company

Employer duties apply to this individual?

Sole director/employee - Peter(who is a director of this company with an employment contract) X

Additional director - Sarah(not on an employment contract) X

Additional director - George(not on an employment contract) X

Additional director - Linda (has a written contract of employment) √ (Peter* and Linda)

Example

* Now there are two directors with contracts of employment duties apply to both Peter and Linda. This would be the same even if Linda was not a director and was just an employee - Peter’s exemption would stop when she joined.


Who is excluded?

Exclusions from automatic enrolment duties include:

• some office-holders are not considered workers, (eg non-executive director, trustee or elected member), but they are only excluded for the activities they carry out as an office holder

• serving members of the military are not workers

• a company with only one employee, if that employee is also a director of that company (but only for the work they carry out for that company).

From 1 April 2015, new exceptions were introduced covering workers:

• who are in their notice period

• who have HMRC tax protected status for their pension savings


Who is the worker’s employer?

• For a worker who works under a contract of employment (an employee) or who is a personal services worker directly contracted to perform work for the company who pays them:

the employer will be the legal entity named in the contract

• Otherwise:

– for a worker who is supplied by an agent to a third party, to perform work personally, under a contract or arrangement between the agent and the third party, then:

• the agent or third party will be the agency worker’s employer, depending on which is responsible for paying the worker

• or, if it cannot be determined who is responsible for paying the worker, then whichever actually pays the worker will be considered as their employer.

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Figures for 2015-2016

Assessment of workers

Monthly gross earnings

AgeWeekly gross

earnings

From 16-21 From 22 to SPA**State Pension Age

From SPA to 74

£486 and belowHas a right to join a pension scheme

If they ask you to, you must provide a pension scheme for them but you don’t have to pay contributions

£112 and below

Over £486 up to £833

Has a right to opt inIf they ask to be put into a pension scheme, you must put them

in your automatic enrolment pension scheme

Over £112 up to £192

Over £833Has a right

to opt inAutomatically

enrolHas a right

to opt inOver £192

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Thresholds v Pay Reference Periods (PRP) 2015-16

Pay Reference Period/Cycle

Lower Earnings Threshold

(LET)

Earnings trigger for automatic enrolment

Upper Earnings Limit

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 £3,532.004 weeks £448.00 £768.00 £3,261.00

Fortnight £224.00 £384.00 £1,631.00

1 week £112.00 £192.00 £815.00


Assessing your workers

• Employers will need to assess all their workers on their staging date – unless they choose to use ‘postponement’ (described in later slides).

• All qualifying earnings must be used to assess a worker’s category (ie eligible jobholder, non-eligible jobholder or entitled worker).

• Qualifying earnings is any component of pay that could be considered one of these pay elements (an employer should use their reasonable judgement): – salary/wages, commission, bonuses, overtime and some statutory

payments (excluding expenses and dividends).

• Eligible jobholders must be automatically enrolled into a suitable scheme – but any active member of a ‘qualifying’ pension scheme with that

employer will not need to be automatically enrolled.

• After the staging date, employers will have to:– assess all new workers who join them– assess some workers every pay period (see slide on ‘Monitoring eligibility’)

– assess some workers again every three years (see slide on ‘Re-enrolment’).


Postponement

• Postponement suspends the duty of automatic enrolment and the need to assess and can be used:

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

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

– on the date a worker meets the criteria to be an eligible jobholder.

• Only one postponement per worker can be made at a given time.

• Each worker can be postponed from one day up to maximum of three months.

• The employer must notify any postponed worker within six weeks and a day of the start of postponement.

• The worker has the right to opt in or join during postponement.

• Employer must assess on the last day of postponement and:

– automatically enrol eligible jobholders, and

– for those workers not eligible, monitor them each future pay period.

Postponement does not change or delay

the staging date


Monitoring eligibility for automatic enrolment

• After the staging date, employers will have to assess, every pay period, any worker who:i. is not an active member of a qualifying pension scheme, andii. is not under postponement, andiii. has not previously been automatically enrolled (or assessed as an

eligible jobholder whilst an active member of a qualifying schemeϮ).

• Workers assessed as an eligible jobholder would then need to be automatically enrolled (or postponed).

• Those workers that do not fall into the above category should be left until the next cyclical re-enrolment date (see slide on cyclical re-enrolment).

Ϯ A worker who has simultaneously been an eligible jobholder and an active member of a qualifying scheme since the later of:

• the employer’s staging date; or• the date they started work for the employer; or• the last day of postponement.


Check suitability of payroll and IT systems

• Payroll software can help a client carry out:– the assessment– enrolment– communications, and– calculation of pension contributions

If their payroll software does not do all of the above, non-payroll software or services could be used.

• Some pension scheme providers offer some or all of these services.

• Clients should plan to test these systems before they go live.

• A lot of errors have been found in staff records - so these should be checked for accuracy before staging.

DM 2750193 V6A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Min DC 8% total*

Min DC 5% total*

Minimum DC 2% total contribution*

DC scheme minimum contributions

April 6th 2019 †

April 6th 2018 †

*% of qualifying earnings

Min DC 2% employer*

Min DC 3% employer*

Phase 1 Phase 2 Phase 3

Oct 2012 May 2017April 2014 June 2015

Large employers

Medium employers

Small/micro employers

New

employers

Feb 2018

† Subject to parliamentary approval


Pensionable earnings

• Pensionable earnings can be based on qualifying earnings OR another definition (eg basic pay).

• When qualifying earnings are used to determine pensionable pay:

– pension contributions are determined by the rules of the scheme, and

– will be based on banded earnings between the lower earnings threshold and upper earnings limit (currently £5,824*pa and £42,385*pa).

• If pensionable earnings are not based on qualifying earnings, the employer can self certify if the scheme meets certain minimum criteria:

– ‘Set 1’ - if basic pay from £1 is pensionable, or

– ‘Set 2’ - if at least 85% of total pay (scheme average) is pensionable, or

– ‘Set 3’ - if 100% of total pay is pensionable.

* Pro-rata of annual amount used in each Pay Reference Period. These figures are for 2015-2016. The Secretary of State will review this amount each tax year.

DM 2750193 V6A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

DC self certification during phasing period

† Subject to parliamentary

approval

Up to

5 April 2018 † 6 April 2018to 5 April

2019 †

From

6 April 2019 † Pensionable Salary

(Basis of % Contributions)

Set 1

(Tier 1)

2% Employer/ 3% Total



Scheme Definition

(if >= basic pay from £1)

Set 2

(Tier 2)




85% of Total Pay (scheme average)

Set 3

(Tier 3)




100% of Total Pay

For further details see the DWP guidance document: www.gov.uk/government/uploads/system/uploads/attachment_data/file/307083/money-purchase-schemes-guidance.pdf


Asking to join a pension scheme


Asking to leave a pension scheme (opt out)• Workers automatically enrolled (or who have opted in) may ‘opt out’.

• Employer must inform staff of their right to opt out and how to opt out.

• The employer must not give out or send out ‘opt out’ forms:

– requests to ‘opt out’ must be handled by the scheme provider, and

– completed forms would normally be sent to the employer.

• A one calendar month opt out window starts on the later of two dates: once the worker is an active member of the pension scheme, or when the employer gives a notice of enrolment letter/email to the worker.

• The worker will get a full refund of all contributions.

• Early opt outs (before the opt out window starts) - are not allowed.

• After the opt out window has closed, the worker may still request to cease membership of the pension scheme (under the scheme rules).

• A worker who has opted out does not need to be assessed again until the employer’s next re-enrolment date (occurs approx every 3 years).


Communicating to staff - information requirements

• Employers will need to communicate* to their workers (unless they are already in a qualifying pension scheme).

• Employers need to inform workers of their rights and whether they are being automatically enrolled or postponed.

• The deadline for most communications is within 6 weeks*.

• Communications must be sent directly to the individual (eg by letter, email, HR web portal).

• We have provided example ‘template’ letters, which may be customised.

www.tpr.gov.uk/writing-to-your-clients-staff.aspx

* Postponement 6 weeks from the day after the assessment date


Record-keeping

• Employers must keep records about their workers and the pension scheme used to comply with the employer duties (pension providers and trustees will also have duties to keep records).

• An employer can use electronic or paper filing systems to keep or store any records, as long as these records can be produced in a legible way.

• Most records must be kept for six years. Those that relate to opting-out must be kept for four years.

• The records must be provided to The Pensions Regulator, on request.

• We can conduct an inspection, if we have reasonable grounds to do so (for example, this may be as a result of a whistleblower alert).


Declaration of compliance

• After staging, employers must complete a declaration of compliance

– and it must be completed within five months of the staging date.

• Employers may receive a penalty fine if they do not complete their declaration on time.

• Employers have to complete a declaration even if they have no one to automatically enrol.

• Employers will need to provide certain details, for example:

– which pension schemes were used to comply with the duties, and– the number of eligible jobholders automatically enrolled into each scheme.

• All postponements applied at the staging date must have come to an end before the declaration can be completed.

• You can start the online process early and partially complete your declaration.

• Registering for the online gateway is not the same as completing the declaration.


Cyclical re-enrolment


Automatic enrolment

Challenges, your role and our support• The story so far and the challenges to

come.

• Support and information for employers and business advisers.

• Your role as a business adviser: how you can help your clients.

• Myth busting - testing your knowledge.

• Q&As

This presentation remains the property of The Pensions Regulator and should not be reproduced without express permission

Are small and micro employers getting the message?

• Over 50% of micro employers staging next year have not started making plans for automatic enrolment.

• Those in early stages of AE preparation expect it to take longest, while those yet to start expect it to take the least time.

• Many will leave their preparations to the last minute.

• You may wish to proactively contact your clients to find out when their duties start.

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2925

31

65 6170 70

65

77

4347

66

8374

82 85 86 88

Spring 2011 Autumn 2011




Spring 2015

Employer awareness** levels higher for those who have received the ‘All Employer Letter’

** Based on awareness of:- Must provide a pension scheme- Have to automatically enrol workers- Will need to contribute to pensions

Micros – 1-4 Micros – 1-4

Smalls – 5-49Smalls – 5-49

On Journey – 83%AEL – 76%No AEL – 65%

On Journey – 90%AEL – 85%No AEL – 77%


Support for business advisers on our website

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Support for employers: Duties checker


Duties checker: Before you begin


Step 1: Tell us if you run a business


Step 2: Is your business still active?


Step 3: Do you employ anyone?


Step 4: See your staging date1


Step 5: Your staging date


Step 6: Do you employ anyone between 22 and SPA?


Step 7: Do they earn more than £833 a month?


Employer classification


I am an employer who has to provide a pension


Steps for those who have to provide a pension

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Our tailored communications approach

Employer with eligible

jobholders

Employer with no eligible jobholders

Staging date-12 -9 -6 -3 +3 +5Months

LetterEmail


What services will you offer your clients?

Decide what services you will offer and what services you will not offer- and inform your clients.

Checking your clients’ start (staging) date

Being a point of contact

Checking who to put into a pension scheme

Creating your clients’ action plan and working out your clients’ costs

Checking records and payroll processes

Choosing a pension

Assessing and enrolling staff

Writing to your clients’ staff

Completing the declaration of compliance

Explaining your clients’ ongoing duties


Challenges around choosing a pension

• Do your clients know:

– if their existing pension scheme meets the automatic enrolment criteria

– where to start looking when choosing a pension scheme

– what pension scheme features to look out for

– 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?


The FCA regulations and choosing a pension

• Employers have the responsibility to choose a pension (or pensions) for automatic enrolment.

• Investment advice to an employer (in their capacity as an employer) is not a regulated activity.

• Investment advice to an individual is regulated and should only be provided if an adviser has the appropriate Financial Conduct Authority authorisation.

• It may not always be easy to tell whether an employer is seeking advice as an employer or as an individual (eg where the client might join the pension themselves).

• Consider the ethical standards set by your professional body and the scope of your professional indemnity insurance.

• You may like to specify in the letter of engagement that any advice to an employer is provided to them in their capacity as an employer and not as an individual.


What pension schemes can be used?

must be registered in the UK or EEA* must have no barrier to automatic enrolment

must be a qualifying scheme

Automatic enrolment scheme

Qualifying scheme

must be tax registered: and meet minimum criteria

Workers already active members of a qualifying scheme do

not need to be automatically enrolled

Must be used for automatic

enrolment and ‘Opt ins’

Employers will need to contribute

to the pension scheme

* European Economic Area states

Employers may also use a qualifying scheme

or an automatic enrolment scheme for

entitled workersScheme for

entitled workers scheme

is registeredEmployers are not required to make an

employer contribution


Can clients use an existing pension scheme?

If clients have an existing scheme, it may not be suitable for automatic enrolment.

1.To be a qualifying scheme:– the contributions due must be at or above the minimum criteria– if it is a personal or GPP contract-based scheme, it is likely to need a

jobholder agreement for each active member.

If it is not a qualifying scheme, it may be possible to change the scheme rules to make it qualifying.

Active members of a pension which is not qualifying would need to be assessed and, if eligible, automatically enrolled into another pension.

•If they want to use a qualifying scheme to automatically enrol their workers:– the pension must have no barrier to automatic enrolment (eg default fund).

The existing pension provider may not allow it to be made a qualifying scheme or an automatic enrolment scheme - check with the pension provider.


Finding a new pension scheme and pension provider

• 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


• It is the employer’s responsibility to choose a pension scheme for their workers.

• Employers should consider what features are important for their workers, for example:– charges (there is an annual 0.75% charge cap on the default fund)

– choice of funds other than the default strategy (eg Sharia,ethical)

– options at retirement and/or from age 55 (eg drawdown options)

– whether they provide ‘one pot per member’ and rules on transfers

– how tax relief is applied (eg through payroll or by the pension provider)

– online member services

– member communications (may be available in multiple languages)

• For help on how to select a good qualifying pension, please see:www.tpr.gov.uk/choosing-a-pension-scheme.aspx

Choosing a new pension - factors to consider

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Tax relief: two mechanisms

• Many small employers and their advisers may not realise that there are two ways that the tax relief on staff members’ pension contribution can be applied:

– Net Pay Arrangement– Relief at Source (‘not Net Pay Arrangement’)

• Many pension schemes only support one tax relief method, although some pension providers allow the employer to choose either method.

• It is vital to understand which system your clients are going to use, to avoid miscalculating the contributions and tax due.

• For more information look at the ‘tax relief’ section at:www.tpr.gov.uk/what-to-consider-when-choosing-a-scheme.aspx


Relief at Source (‘not Net Pay Arrangement’)

For this tax relief mechanism:– only 80% of the calculated contribution is deducted because ...– ... the member’s pension contribution will be taken after tax has been

deducted, and– the pension provider claims 20% tax back from HM Revenue & Customs

(HMRC) and adds it to their pension pot.

•Higher rate taxpayers will have to complete an HMRC Self Assessment tax return in order to reclaim the rest of the tax paid on their contributions.

•Staff who earn no more than their income tax personal allowance (£10,600 a year in 2015/16) do not pay tax, but they would still get the 20% tax relief (even though they haven’t paid any income tax on their contributions).

•We suggest that employers with staff who do not pay income tax, choose a pension which operates Relief at source.

•Group Personal Pensions, the government scheme (NEST) and some master trust pensions usually calculate tax relief this way.


Net Pay Arrangement

For this tax relief mechanism:– no tax is payable on the member of staff’s pension contributions, so the

employer deducts 100% of the contributions due, and– pays them to the pension provider (ie gross of tax).

•If the member earns below their income tax allowance (personal allowance is £10,600 in 2015/16), the member will not get any tax relief benefit.

•Higher rate taxpayers may prefer this method, as they would immediately get full tax relief through payroll without having to complete an HMRC Self Assessment tax return.

•Contract based pensions, such as Group Personal Pensions (GPPs) may not use this mechanism.

•Some, but not all, master trust pensions calculate tax relief this way.


Tax relief example

A weekly paid member of staff, has a basic salary of £10,400 per annum and:• is a member of a pension scheme where only basic pay is pensionable, and• is paying a 1% member pension contribution (ie 1% of £200 per week)[the employer will also pay a contribution, but this is not affected so is not shown].

Under Net pay arrangement:• the full £2.00 per week is deducted from their gross pay and paid into their

pension pot and• as the individual earns under the HMRC personal tax allowance threshold, they

don’t pay income tax and are not able to claim any money from HMRC,• so the cost to the employee of the £2.00 member’s contribution is £2.00.

Alternatively, under Relief at source:• the pension provider claims £0.40 tax relief (20% of £2.00) from HMRC,• the balance (£2.00 - £0.40) is deducted from the employee’s net pay,• so a total of £2.00 per week member’s contribution is paid into the pension• and the employee has only paid £1.60 (for a £2.00 member’s contribution).


Supporting clients in their choice of pension

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• Some of our powers used (to 30 September 2015):

– 2,248 compliance notices

– 145 unpaid contribution notices

– 582 fixed penalty notices

– 7 escalating penalty notices

• In the next 12 months, over 500,000 employers will go through automatic enrolment.

• We expect to see a rise in the number of times we need to use our powers, so our message to employers remains clear: start getting your plans in place early or you risk being fined.

Use of powers

3,782 cases closed by 30 September 2015


• Tell the regulator about the mistake.

• Our approach is that an employer should take reasonable steps to put the worker back in the position they would have been in if compliance had occurred on time. This means the employer should:

– enrol them, backdated to the original date, and

– ensure backdated employer pension contributions are paid, and

– ensure backdated employee pension contributions are collected

• If the regulator decides to take formal action against the employer, and the worker should have been enrolled more than 3 months ago, we have the power to:– require the employer to pay both their own and employee contributions,

and – require interest to be added to outstanding contributions.

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


The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

Automatic enrolment

Myth busting and testing your knowledge


Staging dates

1. A client has two PAYE references and we have sent two letters giving two separate staging dates, which should they use?

A. The earlier date

B. The later date

C. The date applying to the PAYE with the largest number of workers

D. Both dates - with each date applying to the staff on each PAYE


Postponing a staging date

2. Your client would like to delay their staging date and defer their duties by 3 months. Which one of the following statements is true?

A. They should inform The Pensions Regulator as soon as possible and agree a new date.

B. They cannot delay their staging date.


Postponing a staging date

2. Your client would like to delay their staging date and defer their duties by 3 months. Which one of the following statements is true?

A. They should inform The Pensions Regulator as soon as possible and agree a new date.

B. They cannot delay their staging date.

• An employer can use postponement, which delays the need to assess or automatically enrol a member of staff for up to 3 months, but:

• the staging date stays the same

• the declaration of compliance date remains the same

• they must notify any postponed worker within six weeks of the start of postponement

• during postponement the worker has the right to opt in or join a pension

• there is no need to inform us, but records should be kept.


Missed staging date

3. Your client has missed their staging date by 7 weeks and has not yet taken any action to comply with their automatic enrolment duties. Which statement is right?

A. They should inform The Pensions Regulator as soon as possible and take immediate steps to comply with the law.

B. They could use postponement.

C. They will need to pay an immediate £400 fine.


Directors

4. A director only company has two directors and neither has a contract of employment. There are no other workers. What automatic duties do they have?

A. The company has the same duties as any other employer.

B. Both directors are excluded from any automatic enrolment duties and so the company has no duties.

C. One or both of the directors might need to be automatically enrolled, as either could be considered a personal services worker.


Not an employer

5. Your client is not an employer, but has received a letter with a staging date from The Pensions Regulator. What action should they take?

A. They need take no action, as they have no duties.

B. They should ring or email The Pensions Regulator’s help desk.

C. They should tell us they’re not an employer, as soon as possible, by using our online form.

D. They should complete a declaration of compliance highlighting this information.


To tell us you are not an employer

• If an employer does not believe they are an employer because:

– 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

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

• The tool is not for employers who:

– have no staff to enrol on their staging date, or

– for companies in administration or in non-terminal insolvency


Tax relief

6. You operate the payroll for a client who has chosen a pension scheme which uses Relief at source.

For every £1.00 of member’s pension contribution, what should the payroll deduct from their pay?

A.£1.00 from their net pay (after tax has been deducted)

B.£1.00 from their gross pay (no tax is deducted on the contribution)

C.80p from their net pay (after tax has been deducted)

D.80p from their gross pay (no tax is deducted on the contribution)

E.None of the above.

DM 2750193 v4X These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Eddie is not an employee but is he a worker?

Eddie is a self employed graphic designer who regularly works for Acme Workshops Ltd, but works for other clients too. Eddie’s contract with Acme does not permit him to send a replacement. Eddie designs all of Acme’s flyers and magazine ads and also designs and updates their website.

Eddie generally works from home, but sometimes he works in Acme’s offices. He uses his own equipment to print the flyers and if something goes wrong with the printing he produces a replacement batch at his own expense.

When he is given a project to do, Acme set a deadline, but leave it up to him to plan when, where and how the work will be done. Eddie invoices Acme at the end of each project that he works on.

7. Should Acme Workshops consider Eddie to be their worker?

A. Yes

B. No


Eddie is not an employee but is he a worker?

Eddie is a self employed graphic designer who regularly works for Acme Workshops Ltd, but works for other clients too. Eddie’s contract with Acme does not permit him to send a replacement. Eddie designs all of Acme’s flyers and magazine ads and also designs and updates their website.

Eddie generally works from home, but sometimes he works in Acme’s offices. He uses his own equipment to print the flyers and if something goes wrong with the printing he produces a replacement batch at his own expense.

When he is given a project to do, Acme set a deadline, but leave it up to him to plan when, where and how the work will be done. Eddie invoices Acme at the end of each project that he works on.

Eddie cannot reasonably be considered a worker, as:

i) he markets his services to other clients, ii) he uses his own equipmentiii) he works unsupervised and iv) he guarantees the quality of his work.


Karen is a self employed IT professional who works full time for Acme Workshops Ltd, supporting their in house payroll system. She works in a team alongside Acme’s own employees and, when she meets external contacts, uses business cards identifying her as a member of Acme’s staff.

Although Karen usually works in Acme’s offices, she can work from home if she gets permission in advance. Whether she’s in the office or at home she uses a laptop and software provided by Acme.

Karen is paid at the end of each month based on the number of days she has worked. She bears no financial responsibility if she misses a deadline or makes a mistake in her work.

8. Should Acme Workshops consider Karen to be their worker?

A. Yes

B. No

Karen is not an employee but is she a worker?


Karen is a self employed IT professional who works full time for Acme Workshops Ltd, supporting their in house payroll system. She works in a team alongside Acme’s own employees and, when she meets external contacts, uses business cards identifying her as a member of Acme’s staff.

Although Karen usually works in Acme’s offices, she can work from home if she gets permission in advance. Whether she’s in the office or at home she uses a laptop and software provided by Acme.

Karen is paid at the end of each month based on the number of days she has worked. She bears no financial responsibility if she misses a deadline or makes a mistake in her work.

Karen can reasonably be considered a worker, because:i) she is integrated into Acme’s operation ii) she is subject to a degree of control by Acme iii) she uses their equipment and supplies, and iv) she does not guarantee her work.

Karen is not an employee but is she a worker?

DM 2777032 v8M These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

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

• Bringing staging date forward – www.tpr.gov.uk/employers/bringing-staging-date-forward.aspx

• 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

• Declaration of compliance checklist – www.tpr.gov.uk/docs/automatic-enrolment-online-registration-checklist.pdf

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

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


Useful links

• Nominate a contact – https://automation.thepensionsregulator.gov.uk/Nomination

• State Pension Age calculator – www.gov.uk/calculate-state-pension

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

• To register for the automatic enrolment (‘3 coins’) logo - under registration, choose “I require pension automatic enrolment files” – https://communicationcentre.dwp.gov.uk/dwp/index.php

• Bulk declaration of compliance (file upload) – https://www.autoenrol.tpr.gov.uk/

• Description of qualifying earnings in detailed Guidance 3 paragraph 95 – www.tpr.gov.uk/doc-library/automatic-enrolment-detailed-guidance.aspx#s11496

• Automatic enrolment earnings threshold – www.tpr.gov.uk/automatic-enrolment-earnings-threshold.aspx


Additional slides

DM 2750193 v4Y These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Scenario AAssessment date on first day of PRP

Yes

UK worker aged 22 to SPA?

No statutory duty to enrol

No

Staging date

31st

C

1st

R P0 C

1st

R P1 C

1st

R P2

31st 30th

Yes

Total QE paid in PRP > earnings

trigger ?

No

Staging and a calendar month PRP•Pay reference period runs from 1st to last day of each month

•Assessment date is 1 April

•Total qualifying earnings may not be known until payroll cutoff or later.

If the worker needs to be automatically enrolled:

•First deduction needs to made in payday P1 on 28 April

•Opt-out window may not start until after deduction taken

•Scheme contribution based on 100% of April pensionable pay.

Monthly pay reference period (PRP)

Key: C – Payroll cutoffR – Payroll runP – Payday

Issue letter to worker and set up active

membership

Opt-outwindow could start

28th 28th 28th

Automatic enrolment triggered

March April May

DM 2750193 v4Y These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Scenario BAssessment date on 1st

day of month

Yes

UK worker aged 22 to SPA?

No statutory duty to enrol

No

5th

C

6th

R P0 C

6th

R C

6th

R P2

5th 5th

Yes

Total QE paid in PRP > earnings

trigger ?

No

Staging dateMonthly pay reference period (PRP)

Key: C – Payroll cutoffR – Payroll runP – Payday

Opt-out window could start

P1

Feb March April

Issue letter to worker and set up active

membership

Automatic enrolment triggered

28th 28th 28th

1st

Staging with a tax month PRP•Pay reference period runs from 6th day to 5th day of each month

•Assessment date on 1 April (ie the staging date) is after the March payday P1 on 28 March

•Total qualifying earnings (in PRP

6 March to 5 April) assessed using old tax year earnings thresholds.

If the worker needs to be automatically enrolled (from 1 April):

•First deduction needs to be made in the next payday P2 on 28 April

•Opt-out window could start before first deduction taken

•Contribution based on scheme rules(eg for a legal min scheme, based on 100% of April’s qualifying earnings).

tpr dm3184696 v6a these slides remain the property of the pensions regulator and their content...

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