Auto enrolment – an overview for
local councils
Terry Edwards
Senior Pensions Adviser
www.local.gov.uk
This overview….
• Gives a brief outline of what employers should do to
prepare for auto enrolment (but does not cover what
to do if you don’t offer LGPS to all / some workers)
• Points employers to sources of more detailed
information and guidance
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www.local.gov.uk
Preparing for auto enrolment – the
steps you need to take
• Duties from July 2012
• Find out your staging date
• Assess your workforce
• Communicate with your workforce
• Enrolment (and opting out / re-enrolment)
• Register with the pensions regulator and keep
records
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www.local.gov.uk
Preparing for auto enrolment – Duties
from July 2012
• Payment of contributions by 22nd now statutory (if
electronic – otherwise still 19th)
• Prohibited recruitment conduct – no hint of success
being conditional on opting out of pension scheme
• Inducement to opt out of any qualifying scheme – no
action, threat or reward linked to scheme membership
• Unfair treatment / dismissal of workers – no action or
threat against workers who seek to enforce their auto
enrolment rights
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www.local.gov.uk
Preparing for auto enrolment – Find out
your staging date – existing employers
• Date defined by the number of persons in the largest
PAYE scheme (number of persons, including
pensioners and councillors) on 1st April 2012
• Large employers (>120,000) date is 1st October 2012
then phased by size between November 2012 and
April 2017
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www.local.gov.uk
Preparing for auto enrolment – Find out
your staging date – issues to note
• Employers with more than one PAYE scheme use the
largest (number of persons) to determine the staging
date
• Employers who share a PAYE scheme have the
same date except small employers (<50 workers) who
may put back their date to between 1st August 2015
and 1st April 2017
• Apart from small employers who put their staging date
back, employers may bring the staging date forward
(e.g. to avoid end of year) but must tell TPR + agree
with Administering Authority
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www.local.gov.uk
Preparing for auto enrolment – Assess
your workforce
A ‘worker’ is a person who ordinarily works in UK
under:
• A contract of employment (i.e. an employee), or
• Any other contract by which the individual undertakes
to do work or perform services personally for another
party to the contract (i.e. they cannot send a
substitute or sub-contract the work) and the individual
is not undertaking the work as part of their own
business – excludes office holders e.g. councillors)
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www.local.gov.uk
Preparing for auto enrolment – Assess
your workforce – 3 categories of worker
Age
16-21
22-<SPA*
SPA*-<75
Earnings**
Under lower
earnings threshold
(£5,564)
Entitled worker
Between £5,564
and £8,105
Over earnings
trigger for automatic
enrolment (£8,105)
Non-eligible jobholder
Non-eligible
jobholder
Eligible jobholder
Non-eligible
jobholder
*State Pension Age.
**Earnings: Not FTE; not pensionable pay; per pay reference period.
Separate contracts treated separately.
Continually monitor age / earnings to see when first crosses border into new coloured box.
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www.local.gov.uk
Preparing for auto enrolment – Assess
your workforce – issues to note
• Earnings = salary, wages, commission, bonus,
overtime, SSP, SMP, ordinary + additional paternity
pay, statutory adoption pay (not salary sacrifice or
P11D benefits)
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www.local.gov.uk
Preparing for auto enrolment –
Communicate with your workforce
• On your staging date, existing workers will fall into
one of 3 groups:
- those already in the LGPS
- those not already in the LGPS - opted out
- those not already in the LGPS - < 3 month contract
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www.local.gov.uk
Preparing for auto enrolment –
Communicate with your workforce
On your staging date, existing workers already in
LGPS:
• Stay in LGPS
• Eligible and non-eligible jobholders = notification
within 2 months that they are in a qualifying scheme
and where to get further info
• Entitled worker = no info requirements (but send
same letter anyway)
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
On your staging date for existing optants out
(contract 3 months+)
• Non eligible jobholders and entitled workers – do
not auto-enrol but notify within 1 month of staging
date (and if changes category) of right to opt in and
where to get more info (but automatically enrol from
date first becomes eligible jobholder)
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
On your staging date for existing optants out
(contract 3 months+)
• Eligible jobholders – auto-enrol into LGPS + notify
within 1 month that they have been auto-enrolled,
enrolment date, opt out info, etc plus notify Pensions
Section within 1 month
Or
Defer auto-enrolment to 1st October 2017 (if you
apply Transitional Delay they must be informed within
1 month of staging date and given the right to opt in
and told where to get more info)
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
Transitional delay:
• Reasons for / against
• Auto-enrol on 1st October 2017 (if still eligible
jobholder – if not, auto-enrol when first again
becomes an eligible jobholder)
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
On your staging date for existing < 3 month
contracts who are not in LGPS:
• Non eligible jobholders and entitled workers – do
not auto-enrol but send 3 month postponement notice
within 1 month of staging date, but can opt in
• Eligible jobholders - defer auto-enrolment to 1st
October 2017 (makes sense if applying Transitional
Delay to existing eligible jobholder optants out) or
send 3 month postponement notice within 1 month of
staging date, but can opt in
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
From your staging date (new starters)
• New starters with 3 month+ contract –
contractually enrol and send letter within 2 months
saying they have been enrolled into a qualifying
scheme and where to get further info
• New starters with < 3 month contract –
issue postponement letter within 1 month but can opt
in (casuals – put on back of time sheet)
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www.local.gov.uk
Preparing for auto enrolment –
Enrolment
From your staging date
• Optants out – continually review each pay reference
period (i.e. for change in earnings, attaining age 22)
• Auto-enrol if becomes eligible jobholder for first
time and send letter within 1 month that they have
been auto-enrolled, enrolment date, opt out info, etc
plus notify Pensions Section within 1 month
• If becomes non-eligible jobholder or entitled
worker for first time send letter within 1 month saying
can join LGPS and where to obtain further info
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www.local.gov.uk
Preparing for auto enrolment – Opting
out (simplified procedure)
•
•
•
•
•
•
•
Only after contractually or automatically enrolled
Only use prescribed form (from Pensions Section)
Can opt out of some or all jobs
Form to be sent to employer
Employer must notify Pensions Section
Treated as non-member if opts out within 3 months
Refund to be paid by employer within 1 month of
receipt of opt out form (unless payroll missed, then by
end of next pay period)
• Employer to reduce next pay over to Fund by ees
and ers contributions
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www.local.gov.uk
Preparing for auto enrolment –
Re -enrolment
• Re-enrol eligible jobholders within 3 months before
/ after anniversary of staging date (provided did not
opt out within previous 12 months)
• Thereafter within 3 months before / after 3rd
anniversary of previous re-enrolment date
Note:
• If ceases to be eligible jobholder (becomes non-eligible jobholder or entitled worker), and
again becomes eligible jobholder before re-enrolment date without a break, don’t have to
enrol then, but do have to on re-enrolment date (provided still eligible jobholder on reenrolment date)
• If ceases to be eligible jobholder (becomes non-eligible jobholder or entitled worker), and
again becomes eligible jobholder after re-enrolment date without a break, don’t have to enrol
when again becomes eligible jobholder
• So, eligible jobholder only enrolled on starting, or on first becoming eligible jobholder after
opting out after staging date, or on re-enrolment date if eligible jobholder on that date
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www.local.gov.uk
Preparing for auto enrolment – Register
and keep records
• Employers must register with the regulator within 4
months of staging date
• Re registration every three years if re-enrolling
eligible jobholders
• Comprehensive information required to be kept by
employer and Pensions Section to demonstrate
compliance
• Records must be kept for 6 years under regulations
(4 years for original opt out forms)
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www.local.gov.uk
Preparing for auto enrolment –
Compliance
• Regulator has powers to impose penalties for
- failure to comply with duties
- non-compliance with contravention notices
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www.local.gov.uk
Further information- The Pensions
Regulator
Detailed guidance is available on-line at the Pension Regulator’s
website www.thepensionsregulator.gov.uk. Several documents for
employers have been prepared and are updated from time to time. Here
is a list of the currently available guidance notes:
1 Employer duties and defining the Workforce - An introduction to the new employer duties
2 Getting ready - First steps to prepare for the new employer duties
3 Assessing the workforce - How to identify the different categories of workers
3a Postponement
3b Transitional period for defined benefit (DB) and hybrid schemes
3c Having completed the assessment
4 Pension schemes - Pension schemes under the new employer duties
5 Automatic enrolment - An explanation of the automatic enrolment process
6 Opting in and joining and contractual enrolment - How to process pension scheme membership outside of the
automatic enrolment process
7 Opting out - How to process ‘opt outs’ from workers who want to leave a pension
scheme
8 Safeguarding individuals - The new safeguards for workers
9 Keeping records - Records that must be kept by law under the new employer
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www.local.gov.uk
Further information- other resources
• Guide to auto enrolment – LGA produced - LGPS
based – see
http://www.lge.gov.uk/lge/core/page.do?pageId=179
95528
• Training course – auto enrolment and other
employer duties run by LGA - LGPS based
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www.local.gov.uk
Thanks for staying awake
Any questions?
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www.local.gov.uk
Disclaimer
The information contained in these slides has been
prepared by the LGPC Secretariat, a part of the Local
Government Association (LGA). It represents the views of
the Secretariat, based on our current understanding of
the law. It should not be treated as a complete and
authoritative statement of the law. Readers may wish, or
will need, to take their own legal advice on the
interpretation of any particular piece of legislation. No
responsibility whatsoever will be assumed by the LGPC
Secretariat or the LGA for any direct or consequential
loss, financial or otherwise, damage or inconvenience, or
any other obligation or liability incurred by readers
relying on information contained in these slides.
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www.local.gov.uk