JULY15WEBINAR These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Neil Esslemont Head of

JULY15WEBINAR 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

14 July 2015

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

Automatic enrolment webinar

for business advisers - what’s your role?


Intro

• We are aiming this webinar at accountants, bookkeepers, financial advisers and payroll providers.

• Today we will be covering:

• which workers need to be assessed for automatic enrolment

• worker communications

• completing the declaration of compliance - and how to avoid fines

• the kind of tasks that employers are asking their advisers for help with

• your role - what you can and can’t do as an adviser

• how you might help your clients choose a pension and test payroll software.


The 12 steps - where can / will you help?

1. Checking your client’s staging date

2. Being a point of contact

3. Checking who to enrol

4. Creating your client’s action plan

5. Working out your clients costs

6. Checking records and payroll processes

7. Choosing a pension

8. Assessing and enrolling staff

9. Writing to your client’s staff

10. Knowing your client’s ongoing duties

11. Completing the declaration of compliance

12. Re-enrolment


Staging profile (number of employers starting their duties)

Planning ahead is key. Very large volumes staging from January 2016


A person is likely to be subject to the automatic enrolment legislation if they are:

i. aged 16 to 74 (inclusive) and work or ordinarily work in the UK

and

ii. 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.

† directors who do not work under a contract of employment are never considered workers

* 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 do the AE duties apply to?


Who is a ‘personal services worker’?

• An individual (who is not a director) with a contract to perform work or services personally, may be a worker.

• The employer needs to judge whether or not they are undertaking the work as part of the individual’s own business. So, 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?

• 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 therefore 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.


Is a director a worker?

• 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

• If your client has received a letter from us and they don’t think they are an employer, then let us know by completing this form:https://automation.thepensionsregulator.gov.uk/notanemployer


Who else is excluded?

Some office-holders are not considered workers and are excluded from automatic enrolment duties (eg company secretary, non-executive director, trustee or elected member)

•but they are only excluded for the activities they carry out as an office holder and so could be a worker for other duties/work they carry out.

From 1 April 2015, there are some situations where an employer may choose not to automatically enrol eligible workers, including for workers:

•who are in their notice period

•who have previously opted out or ceased membership of a qualifying pension

•who the employer has reasonable grounds to believe have HMRC tax protected status for their pension savings.


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 employee - 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.


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.

- Should Acme Workshops consider Karen to be their worker?

Is Karen 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.

Is Karen a worker?


Communicating to workers

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

• 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 for:

1. enrolment

2. postponement, and

3. worker’s right to opt-in/join a pension

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


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 will need to provide certain details, for example: – which pensions were used to comply with the duties, and– the number of staff automatically enrolled into each pension.

• The online process can be started early and a declaration can be partially completed and saved, so that it can be finished at a later date.


Compliance

• There are a number of potential areas of misunderstanding that could lead to unintentional non-compliance:

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

– Postponement doesn’t delay all duties or change the declaration of compliance deadline.

– Employers shouldn’t deliberately try and find out who wants to opt out beforehand, as this could be classed as inducement and this is not allowed.


Your involvement

Ask your client to nominate you as a secondary point of contact for automatic enrolment.

You could help your clients find information about pensions.

You could act as a channel for information, by referring them to independent or professional bodies’ websites.

You could help employers customise their workers’ statutory letters - and issue them on their behalf.

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

Do ensure that all parties are aware who is carrying out each of the employer responsibilities or tasks.

You should check if your service proposition restricts your clients’ pension choice (eg if your payroll system only works with certain providers).


The FCA regulations and choosing a pension

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

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

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

• 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.


Supporting clients in their choice of pension


• Our research has found employers are keen to make the right pension choice for their staff.

• Your client may wish to consider what features are important for their staff 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/employers/setting-up-a-pension-scheme.aspx

Choosing a new pension - factors to consider


Finding a pension provider

• A number of pension providers will accept small and micro employers.

• There are two types of pensions likely to be available to your clients - ‘Group Personal Pensions’ and ‘Master Trusts’.

• Master Trusts are run by a board of trustees and Group Personal Pensions are provided by insurance companies.

• For further information, including help on finding a provider, please see:

http://www.thepensionsregulator.gov.uk/employers/finding-a-provider.aspx


Choosing a new pension - how to find one

Options on how to find a pension for automatic enrolment:

•Schemes with master trust assurance

– independently reviewed to demonstrate they are administered to the standards of the master trust assurance framework

– the list includes providers who have said they are open to small employers

•Schemes listed by other industry bodies

– National Association of Pension Funds (NAPF) Pension Quality Mark

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

•The Government scheme

– National Employment Savings Trust (NEST) is a pension scheme that all employers can use to meet their duties


Payroll services and pension providers

• Employers have ongoing responsibilities to assess staff whenever there’s a change of circumstances, for example age and earnings.

• If you provide a payroll service, you will need to make sure any payroll software you use works with your clients’ chosen pension providers.

• We recommend testing the transfer of data from payroll software to each pension provider before going live to help highlight any problems.

• The employer’s choice of pension should be based on what is best for their staff – so this should not simply be decided on what is easiest or cheapest for the payroll service provider to administer.

• Ideally, you should encourage and allow your clients to choose from multiple pension providers.

• If you offer a payroll service that only works with certain pension providers:– you should make your clients aware that there may be other pension

providers available to them that could be more appropriate for their staff.


How can we help?

• Visit our website - lots of information for business advisers and employers.

• Sign up for ‘Automatic Enrolment news by email’ – be kept in the loop for new developments at https://forms.thepensionsregulator.gov.uk/subscribe.aspx

• Bulk staging date data - do you have a large number of clients (minimum of 500 PAYE schemes) for whom you would like the staging date? To apply, contact us at [email protected]

• Bulk Declaration of Compliance (DoC) import facilities - if you intend to offer DoC as a service, you can now upload multi-employer details direct into our website at https://www.autoenrol.tpr.gov.uk/

• Employers or their representatives that need their letter code can use our online tool (the PAYE reference and accounts office reference will be needed) at: https://automation.thepensionsregulator.gov.uk/LetterCode


Any questions?


Useful tools - 1• Create an action plan and add important dates to calendar:

www.tpr.gov.uk/employers/planning-for-automatic-enrolment.aspx

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

• Staging date tools:

– finding out a staging date www.tpr.gov.uk/employers/tools/staging-date.aspx

– staging date for a “new” company set up after 1 April 2012

– www.tpr.gov.uk/employers/exceptions.aspx

– bringing staging date forward

– www.autoenrol.tpr.gov.uk

– getting bulk staging dates (minimum of 500 PAYE schemes)

– [email protected]


Useful tools - 2• Find a letter code online:

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

• Tell us if you are not an employer:https://automation.thepensionsregulator.gov.uk/notanemployer

• Work out pension contributions:www.tpr.gov.uk/employers/employer-contributions.aspx

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


Useful links • Business adviser’s online guide to automatic enrolment:

www.tpr.gov.uk/automatic-enrolment-guide-for-business-advisers.aspx

• Choosing a pension:www.tpr.gov.uk/choosing-a-pension-scheme.aspx

• Finding a pension scheme:www.tpr.gov.uk/employers/finding-a-provider.aspx


Useful links - videos

•How to plan for automatic enrolmenthttps://www.youtube.com/watch?v=fKZBCqSaH6k

•How to assess your client’s workforce for automatic enrolmenthttps://www.youtube.com/watch?v=opStqE9BPA4

•Automatic enrolment duties for sole directorshttps://www.youtube.com/watch?v=kizFhSaM9Fo

•Payroll softwarehttps://www.youtube.com/watch?v=sHVWHV9xYEU


Useful links - webinars

• Automatic enrolment – for business adviserswww.tpr.gov.uk/press/webinar-automatic-enrolment-for-business-advisers.aspx

• Automatic enrolment question timewww.tpr.gov.uk/press/webinar-automatic-enrolment-question-time.aspx

• Automatic enrolment declaration of compliancewww.tpr.gov.uk/press/webinar-automatic-enrolment-declaration-of-compliance.aspx


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

Subscribe to our news by email:https://forms.thepensionsregulator.gov.uk/subscribe.aspx

Thank you

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


Additional example


Is Eddie 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.

Question - Should Acme Workshops consider Eddie to be their worker?


Is Eddie 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.

Documents

JULY15WEBINAR These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Neil Esslemont Head of