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Good morning, everybody. Hello. Welcome to my webinar this morning on what you need to know about pensions. I'm Amanda Chadwick, I'm a senior speaker at Peninsula Business Services, Limited, which is an HR and Health and Safety Consultancy based on Manchester that helps integrate itself within 28,000 companies throughout the UK.Today is the 6th of March and paying attention to the date here, Thursday the 6th of March because if you are on YouTube in a year's time and viewing these slides or you've printed them off, be aware of the date that this is broadcast and what we're talking about. Also I'm going to touch a little bit on finance here, but I am not a financial expert. So I can't talk about contributions or how much you should be paying, but I put as much information as I could possibly do and talk about with my knowledge about pensions to you without becoming a financial expert.So, let's get started. I don't know if you know, but 2.9 million people automatically enrolled into workplace pensions since October 2012. And what's changed is a lot of people are thinking about pensions, now. 91% of people say they should save for a pension instead of living for now. Also, just another statistic there, 90% stayed up to date when they automatically enrolled in their workplace pensions. In fact, McDonald's said a lot of their stuff, I think they thought they'd have a higher rate of people opting out of pensions, but a lot of people stayed in and they have quite a relatively young work force, so people are thinking about many. So, auto-enrollment, why is this happening? Well, millions of people are not saving enough to have the income they're likely to want in retirement and life expectancy in the UK is increasing at the same time people are saving less into pensions. People seem to be concentrating on the here and now and not their future. In 1901 there were ten people working for every pensioner in the UK, but in 2010 there was 3 people working for every pensioner. And by 2050, the estimate is just 2 people per pensioner. So, commencing from October 2012, so talking past tense here, the Pensions Act 2008 has made it compulsory for all employers ranging from multi-nationals to a firm employing one or two staff to provide a qualified pension scheme within their workplace and to automatically enroll all eligible employees. This will radically change the shape of pension provision in the UK and could have significant cost implications for all employers. So, we're going to talk about that later, we're going to talk about the effect it has on employers from the employment law side. But let's still talk about some of these statistics. Why the reforms? Well, as I said, many are not saving at all and many are not saving enough. The government estimates 7 million people are not saving enough for retirement. 86% of UK employers have no pension provision. 31% of workers don't take up employer contributions. 38 million workers have no workplace pension provision, and this is 53% of the UK workforce. So if people don't book their ideas when they start thinking bout their future, we're actually going to have old age poverty. So, people are living longer so let's have a look at these statistics. Over the past 50 years, between 1960 and 2010, the average life span has increased by around 10 years for a man and 8 years for a woman. More than half of the babies born in developed countries today will live to be 100. Life expectancy for someone state with time and age is now 86.3 for men and 88.7 for women. So those are statistics. I spoke to a friend of mine the other day, she's all 'I don't want to be working past 50'. And I thought, goodness me, you're going to have 38 years sat there retired. I'm sure you'd get bored. So people are more active, more healthy and so we like things more than we used to as well. We have more activities, more interests, and so we need money for that. This is basic employer obligations. Effective from the first of October 2012, employers will have to enroll eligible job holders into a qualifying workplace pension arrangement. Employers will need to pay contributions for eligible job holders in the scheme. Who do you enroll? Employers over the age of 22 and under state pension age. Work or ordinarily work in the UK, part time workers, contract workers, agency workers, the contract need not be in writing, remember that in polite terms. And then they must meet the qualifying earnings threshold of 9,440 pounds. All employers have the right to opt out of auto enrollment. If they choose to opt out, after three years the auto enrollment process must be repeated. So it's repeated every three years, and we're going to tie this up again later on. Let me speak about the employment law handbook because we need to make amendments for that to include the opt-out. There are few exemptions, employer duties do not apply to these people. Sole employee in the company, or serving members of the Naval Military or Air Forces of the Crown. So, this is the earnings and we've got some terms that are used when we talk about auto-enrollment. Eligible job holders, but they can join but do not need to be auto-enrolled. They must be given the information, must be involved in the roll out, and contribution's compulsory. And titled workers can join, not automatic, but contribution is not compulsory. And the earnings trigger will change annually, remember that. Look at that graph there and have a look at the age and what is eligible and non-eligible and then titled worker. Those are the terms, and you must familiarize yourself with those terms when you're speaking to your financial adviser because you'll know what they're going on about. So what do employers and employees need to pay? Employers are required to base their minimal contributions for auto enrollment on qualifying earnings. These are earnings between 5,668 and 41,450 and they do include basic salary, commission, bonuses and overtime. So, lot's of people asking that question, do they include that? Yes, they do. The limits are expected to be inline with the National Insurance threshold. When do the requirements start? Auto enrollment will be phased in from the first of October through to the first of March, 2017. Employers will have a set time scale for starting auto enrollment known as their Stage In date. And I'll give you the link later on to go onto the government's website to find out what your Stage In date is. This will be based on the number of employees on the payroll as of the first of April, 2012. These are the dates for auto enrollment for the company they work for. It's being rolled out over the next 6 years. This is large employer, so we have the likes of Asda. By the way, Asda went through auto enrollment and they said that they could have done with a further three or four months in top of the year in advance. They planned for auto enrollment. They planned with a year in advance, yet they could have done with a lot longer and they've got a superb team there. They've got HR, they've got financial people. They've got people helping them legally and they've got the admin support in place. That's a large company saying we needed longer, so you've got to think about this and allow the time. So, we've got large employers for 250 or more workers. They will have to start automatically enrolling their workers from October to February this year. Well it's gone, 2014. Medium employers are 50 to 249 workers will have to start to automatically enroll their workers from April 2014 to April 2015. If you're on this line now, listening to me and you fall into that category and you haven't done anything about it, really you should have thought about it over a year ago, so get your act together. Small employers, 49 workers or less, will have to start to automatically enroll their workers from June 2015. So I'm hoping that I've got a lot of you listening to me today to April 2017. New employers, which were established after April 2012 have to start to automatically enroll their workers from May 2017 to February 2018. Employers who choose to find benefit or hybrid schemes can delay their Stage In date until the 30th of September, 2017. You need to speak to a financial expert to know what those means, because I don't. Who has to be auto enrolled? employers are required to auto enroll all eligible job holders into pension scheme that meet specific criteria. Both employers and employees will have to make minimum contributions to the scheme. Employers must identify and continually update the status and eligibility of employers for auto enrollment. So, assessing your work force. This is really, really important because you've got to set your work force status, because you might think they're generally self employed, but actually in employment law it's very rare we come across them. They may be eligible for auto enrollment. How do I know which employees to enroll into a pension? Well, the diagram below shows how you establish to this question. Do I employ the individual? This is where you need help to find out if they are eligible. You know, you might think, as I said, that they're self employed because you checked with your accountant, but many times we have them come back and say they're actually an employee or a worker. So it's up to you, even if your accountant is giving you advice that said these are self employed, he's not talking or she's not talking in employment law terms. You need to double check. Get expert help on this because you don't want to go afoul of the law, you don't want a fine and you'll see the penalties shortly because I'll put them up on the screen for you. You need to check your work force status here. And the government is saying it's totally up to you to find out. It's not up to them. So do I employ the individual? Does my employee work in the UK? What age is my employee? What does my employee earn? Is my employee ineligible or non-eligible job holder or an entitled worker? Assessing your work force. Do I employ this personal. Under the contractor's service employment, does the individual undertake to personally perform work or services for you? So, you've got to look into this. This is a question that comes up in the Stage In section, and you've really got to look at whether they invoice you for their work, do they work for other people, do they ear a uniform, do you provide training? And what I'm looking for, if you're going to say to me that they're genuinely self-employed is I’m looking for clear water here. So in employment law terms, generally, we have a contract for services in place, a worker's agreement, a volunteer agreement. That's what I am looking for. So there's clear water so we know exactly where we stand with these people. Everybody likes to be self-employed until you try and get rid of them or you stop paying attention. You know, so just be very, very careful. Great caution here. So if somebody says to me, I've got somebody who's self employed, I would say, do they invoice you? Tic the box. Do they work for other people? Yes, they do. If they couldn't turn in today could they send somebody else in their place? Yes, they could. Do you provide a uniform? No, we don't. Do you provide equipment? No. Do you provide a car or a van? No, we don't. They supply everything. So that's what we're looking for, okay? You must review their employment documentation. All workers are in scope, make sure the contract clearly defines the worker relationship. So, here is the website for the pension regulator. This regulator, they are responsible for ensuring employers comply with the new law. They have produced guidelines for you. they will write to each employer before the date they are required to start enrolling workers into a workplace pension, and depending on the size of business, they may write more than once. Make sure you open the letter. They have used social media, they've used press, radio and TV and very well known faces like Karen Grady and people of Dragon's Den to communicate to employers to say we've got to take this seriously. They've also produced tools and step by step guides on their website. So here is the connection here, here's the link. Write this down. Www.thepensionsregulator (that's O-R).gov.uk/employers/deatailedguidance.aspx. And that gives you guidance on what your Stage In date is and information about pension. Employers will gradual enroll all their eligible workers into workplace pension between 2012 and 2018. There are exemptions for auto enrollment. They are the self employed and sole directors. Employers are required by law to provide the right information in writing to the right individual at the right time so that people know how automatic enrollment will effect them. So, there's word on the street here there are a couple of companies that are being fined, and the reason they are being fined this moment is because they didn't' use the right communication tactics. They didn't inform the right individuals at the right time and they didn't roll it out correctly and that's why they're being fined. These are huge organizations, we're talking about. So, only eligible job holders are automatically enrolled by the employer. Non eligible job holders will not be automatically enrolled by can elect to join the pension scheme. If they choose to join the scheme, the employer will be obliged to make an appropriate pension contribution. An entitled worker, remember these three titles I spoke about earlier on, eligible, non-eligible and entitled. Entitled workers will not be auto enrolled but can elect to join the pension scheme, and in this instant the employer does not have contributional obligations to fulfill. One of the key challenges to employers is to consistently audit the status of their workforce and to implement the statutory communication reporting and enrollment requirements. That is food for thought here. So what schemes can you use, right? These are the ones. Occupational trust based schemes. Group stakeholder scheme. Group personal pension schemes. Group SIPP auto enrollment scheme and people's pension. Now, I have to say to you, if I'm employing people I want them to stay with me for a long time. I'm going to take time out to spend time and look at the best pension scheme for my staff. And not only that, there's a moral issue here. I want to make sure that people are saving up for their future and if they have to contribute, and I have to contribute, then I'm going to make sure that I pick the best scheme for them. Don't just pick the first one that comes to mind. Invest and look into it because you're providing for their future, looking after them, and you're getting commitment. I don't know if you've ever had a friend that's worked for the Council, they never leave do they? They stay there for decades. Same as fire and the policy and we know in the past why have they stayed there? Because the pensions are brilliant. They stay now for private companies. Get out there, look for the right scheme, don't got all up because it's easier and no hassle for me, look at a good pension provider. Look after your staff. So, warning. You must not encourage employees to opt out. You must not use recruitment practices that will benefit job applicants to indicate they are prepared to opt out. Or, treat an employee unfairly or put them at a disadvantage because of auto enrollment. Okay? Because you can't be bothered, you take all your staff for a drink down the pub and you say, listen, don't auto enroll, I'll sort you out later on in the year. And this will happen, by the way. This will happen. I don't want you to do it because you will fall foul of the law, you'll end up in trouble, you'll get huge fines, so don't do it. Here are the penalties for not doing what you must or doing what you must not. Fixed penalties are issued by the pensions regulator, that's 400 pounds, and then a prescribed daily rate applies for non-compliance. So look at where you are within the number of employees and look at what your daily rate is. So even somebody with just 50 staff, the prescribed daily rate fine of 2 and a half grand, that's absolutely astronomical. So please, listen to me. Get it right. Employers opting out. Employers cannot opt out, therefore all eligible employees must be enrolled from the staging date. A period of up to three months will be committed before an employee is auto enrolled. This brings me to probationary periods here, okay? If you've got that three to six month probationary period, you can have a reminder system of three months that they will be auto enrolled into the pension scheme. So just a little bit of a reminder, there, when it comes to the probationary period, you might want to write something in there to say we hold back from auto enrolling you within the first three months until you've finished the first three months of your probationary period and then we will enroll you. So you might want to write something in there and have a reminder system in place. Employees cannot in join this period and so benefit from employer contribution. However, if employees believe that pension saving is not appropriate for them, they will have the option to opt out of auto enrollment. Brings me to the handbook again. In the handbook, legally, this is a legality, you have to put into the handbook, how you roll out how to inform your staff, how they opt out, how they opt in and the ways that they do it, the processes you've got in place. So big news here, the handbook has to be changed to include this. If an employee illicitly opts out, they will be automatically enrolled again at the end of each three year period, so we have to put this in the handbook to tell them. And I'm looking for the employer side here. I'm looking after you. I want to protect you, the employer, the manager, trustee, I'm in HR. So, I'm saying to you, you get this in place, you roll out properly, you get them to say there for the training, you get them to sign to say they've received the updated handbook to include the auto enrollment, they've read it and they understand the opt in again every three years and that way, you've got defense if ever you were questioned. So we must really make sure that we actively repeat the opt out process to make sure that we roll it out correctly and that staff are kept in the loop. Key questions employers should be asking. When do I have to have my scheme in place? Who do I have to enroll in the pension scheme? So, when do I have to have my scheme in place? Who do I have to enroll in the pension scheme? How much is going to cost? What are my options in terms of providing a scheme? Is there anything I can do to fund more cost effectively? And what systems of support do I need for the administration? So these are some headlines and preliminary thoughts. So auto enrollment is a new, complex and challenging piece of legislation that will take time to implement. Do you have a specific go live date that you must adhere to and you must register with the pensions regulator? Do you know your companies Stage In date and what steps you need to take to be fully compliant? There are strict and challenging reporting requirements to both the DWP and the pensions regulator. Do you know what information is required, how you will retrieve it and when you should submit and to whom? You are required to have a fully operational and compliant pension scheme embedded in your company. If you do not already have a pension scheme in place, and make sure it is the right one, because some of these pension schemes aren't meeting the requirements of the new law. How will I go about implementing one? There are strict criteria. Do you know if your existing arrangements comply, payroll, workforce and how often? There are potentially significant cost implications when implementing auto enrollment. Do you know what the financial impact on this new legislation will be on your company? Do you know how much you need to pay in pension contributions? What strategies have you considered to minimize the costs? And also the administrative requirements of auto enrollment are substantial and should not be underestimated. Do you know how you'll manage and eligibility, non eligibility, opt outs, opt ins and auto enrollment on a weekly or a monthly basis? Again, some headlines and preliminary thoughts. The government is imposing fines and ongoing requirements to be able to help you meet your initial and long going auto enrollments of your dynamic and unique work force. Now, if you've tried to scribble down those questions and answers there, well questions within answer of a question. If you tried to scribble it down, let me tell you, these slides will be available later on in YouTube, so you can replay it and it took me a long time with pensions. Pensions is not my big thing. Pensions to take it in, you know, the first time you've heard it, you're like, gosh, I can't really understand what they're going on about. And it takes a while for it to sink in. This is why you need to time to allow to get this right. I'm going to come from the employment law side in a moment, but this is just some of the headlines and preliminary thoughts. So employer obligations. All eligible job holders, eligibility, status of your workforce is an ongoing task. An order of every employee must be carried out at every pay reference period. This could be as often as weekly in some cases, but usually I think now it's more typically monthly. On completion of the weekly or monthly audit, employers are obliged to communicate the initial eligibility status of an employee to that individual in a prescribed format. Employers are then subsequently required to keep the employee notified of any changes to that status and set out any necessary next steps. Employers are obliged to certify their compliance into auto enrollment annually. Employers must contribute to a pension scheme all eligible job holders and also for any non eligible job holders who choose to opt in. It is not possible for an employer to opt out, and you cannot encourage your employees to opt out. Changes to contracts and employment period, like we spoke about earlier on. Weekly or monthly. Stage in dates have been announced for all employers providing deadlines for compliance with the new legislation. It's commencing October 2012 for the UK's largest employers and then it will be phased in over the next four years. Managing job holder eligibility together with the ongoing communication to the workforce, the formal reporting requirements and the basic costs of meeting the pension contributions will be potentially challenging from a resource time and cost basis for most employers. So I would say, from the employment law perspective, to look at all other areas that you might actually look at saving some costs. I always talk about growths in my webinar and saving costs. You might want to look at things like wastage policies, managing sickness and absenteeism, and we've got a dedicated sickness team that deals with sickness issues, and you might save money through that that might actually go towards contributing to people's pensions. Search policies, lateness policies, all areas where you can recover some of this cost. Employer obligations, here we go. This is the employment law side of it. This is a great opportunity from the employment law perspective because lots of companies struggle, I think, I want to put a new a policy in place. I want to change what I've got but I haven't got the time, but actually, I don't want to offend my staff. You now have to change the employment law handbook to include mention of the scheme. To include reference to automatic enrollment, either at the start or within a three month period. You've also got to include in the handbook how you inform them, and that if you don't hear otherwise, they will automatically be enrolled. You have to mention also, how they opt out, what the process is. You need to mention of how every three years they're going to go through the same process. You need to mention that you have a proper delegation responsibility, proper roll-out and information and you know what you need to do, you need to remember whilst your doing this, you have to update the handbook anyway, it's a great opportunity for you to change things that you've wanted to change for a long time. Like, put policies in place that are going to save you money. Mobile phone technology, social networking policies. The probationary period to revisit that to include that you mention within the three months that they won't be auto enrolled into the pension scheme. To maybe put in a wastage policy that saves you money. To put in a lateness policy. To put in things that will save you money and help you use that money towards the contributions of the pensions. So, as I said, it is a legal requirement. This means you have to do it. You have to make sure that you've got mention of the scheme in the handbook. You have to put everything I've mentioned there in place in the handbook but also have a process, a proper roll out with information to include this in induction and remember that this roll out is a chance to review all your documentation and amend other policies you've been thinking about for ages. The statement of main terms, again reference to the probationary period here, and the fact that you need to mention in the statement of main terms, details of the pension provider. That's a legal requirement. Again, from me, from the HR, employment law perspective, you need to check the work force status, and for anyone listening, please, if you need any help, contact us. You need to consider settlement agreements now and to include pension contributions into that, because if you don't, the tribunal will. And also, remember, this is a great opportunity, if you pick the right pension provider, you're going to have the benefits you can use at recruitment when you're advertising. So, the cost to employers. Whilst research has shown that auto enrollment is one of the most effective ways to increase pension scheme membership, the proposed changes will present significant additional costs to businesses. We've got administrative costs, consider the implication of the detailed rules being applied, can covering the process of enrolling staff and dealing with opt outs. Recording, keeping requirements and potential payroll system changes. And then we've got costs of non compliance. We've got the fines, which I've spoken about earlier on. So we need to make sure that we don't fail to comply. We need to make sure that we get the roll in place. We have good processes in place, we update our documents, we include it in the handbook, we include it in statement of main terms and we get everything spot on so we don't get fines. So summary. Next step for employers. Establish your Stage In date. Discuss with your existing professional connections, like accountants, scheme advisers, what your options are. Establish time scale and resources needed. Review your statement of main terms. Review your employee handbooks. Review your roll out procedures that you're going to have in place. Check your work force status. Have a communication plan and evidence of that communication plan with backup evidence and get people to sign and have a proper process. Also, for further help, we work with a company and we've been doing face to face events throughout the UK with this company. And they are 75.3.com and that have a process in place, a system in place. If you want to contact them, that's totally up to you. They deal with finances and pensions and are helping lots of employers at the moment. Their website I've put on there, it's www.75pointthree.com/auto. We use those and we work with them because they are award winning financial advisers. If you'd like any further information, if you'd like to attend a face to face pension event where we do have a financial adviser there, we have the legal team there and myself, if you'd like to attend a face to face event, please contact me, Amanda@pensisula-uk.com. We're hosting them all over the country. I'd like to thank you for listening. I can't go into the financial side because I'm not a qualified financial expert. All I can talk about is the pensions as much as I know, and I hope I've brought as much information and made it digestible for you so that you do understand it. If you would like any free advice, if you'd like information about, please contact me. That is my email address by the way. My link for the recording of this webinar is available later on YouTube, and any previous webinars that I've held. And that is www.YouTube.com/PBSpressoffice. If you'd like me to speak at an event you might be hosting for your clients on pensions, on Employment Law Legislation, motivation, mental health, or anything you can think of, really, that involves employment law, sickness and absenteeism, or government focus on sickness, I will come to an event and I will speak. My company, Peninsula, pay me to talk, so it would be free to you to have me at an event and speak to your clients. For more employment law advice contact Peninsula today. Also, if you would like to feature an editorial in any of your publications, again, contact me. But I hope that I've helped you.