RTI-and-Pensions by shitingting


    Real Time Information

Gary Ging – Senior Business Analyst
PAYE Reforms - background
• The current PAYE system has remained fundamentally unchanged since 1944
  (in 2012 it will celebrate its 68th birthday)
• In tax year 2009/2010 the system brought in £249 billion in tax and NI
• Collected £1.1 billion in student loan repayments
• Works well for the vast majority of those in stable circumstances
• However, it does not work well for: -
             • Those who have multiple employments
             • If you are constantly changing employment/employers
             • Seasonal workers

PAYE Reforms

Issues the current system faces?
•   5 million tax payers receive a repayment or bill following the tax year end
•   1.4 million tax payers earning less than £10,000 overpay tax
•   Student loans can continue being deducted having been fully repaid
•   Individuals with more than one employment can over pay NI
•   NI and PAYE Service recently migrated the old system of 12 disparate regional
    databases into one database, but this has had data quality issues.

How much is the current system costing?
•   £2.5 billion is the cost to collect tax for HMRC
•   £0.7 billion is the cost to employers to operate PAYE
•   £1 billion spent on HMRC administration
•   £5 billion in benefit fraud
•   £0.5 billion spend on modernising HMRC systems – currently no return on

So what is the PAYE Reform?
• Phase 1 – Real Time Information – sharing of information on PAYE and other
  deductions collected at the time employers pay employees.
• Phase 2 – Centralised collection of TAX and NIC – HMRC calculates PAYE, NIC and
  Student Loan deductions . This is currently on hold until Phase 1 has been

What does this mean for Employers?
• Instead of sending information once a year at Payroll Year End, employers will be
  required to provide information to HMRC for PAYE, NIC and Student Loans every time
  the employee is paid.
• RTI data will be sent via the Government Gateway or EDI, however, it is HMRCs long
  term aim to use the BACs system.
• Under RTI employers will no longer need to submit P14/P35 end of year returns and the
  process of taking on new starters and leavers will be simplified.
• Benefits in Kind - P11D, P9D and P11D(b) - will remain, for the time being.
What are the benefits of RTI?
Benefits for Employers and Employees
• Reduced Administration
• Fewer overpayments and underpayments
• Improved customer service

Benefits for HMRC
• Reductions in errors and fraud
• Better debt management of employers PAYE & NIC liability

     The success of moving the current benefit system to Universal Credits
           from October 2013 is dependant upon the success of RTI

So what exactly will change?
• New data alignment process

• New employee process – P45 & P46 will not exist

• Leaver process – No P45, new ‘Leaver Statement’

• Paying employees – must now submit information to HMRC (Full Payment

• Paying HMRC – Only need to inform HMRC when making adjustments (Employer
  Payment Summary)

• Year End – No P35, P38(A) or P14

• N.I. Number verification – electronic verification process (NINO Verification
When does RTI impact employers?
• April 2012 – RTI pilot with volunteer employers
• April 2013 – RTI mandated for large employers (>250 employees)
• October 2013 – RTI mandated for all employers

What is Sage doing?
• We have been working closely with HMRC since the consultation paper for RTI
  was published
• We have a number of customers taking part in the pilot and continue to work
  closely with HMRC to ensure it’s success
• We have held a series of employer forums across the country to inform our
  customers of the changes, in conjunction with HMRC, and will continue to do

What should you be doing now?
• Talk to your payroll software provider - are they going to be ready for April

• Review your current processes – are you going to be ready for April 2013?

• Review your payroll data – the quality of your employee data is key to the
  success of RTI

Thank You!

      Pension Reform:
      An Overview

Catherine Willis
Business Analyst
What is the Workplace Pension Reform?

• As a society we are living longer, healthier lives.
• Experts predict that without change, millions of people will have
  inadequate income in retirement.
• Following the 2005 Pensions Commission, a package of reforms
  covering state and private pensions are being introduced.
• Pensions Acts was passed in 2007 and 2008.
• Pensions Bill 2011 received Royal Assent on November 3rd, 2011.

      “From 2012 Employers must provide a “qualifying” pension scheme and
   automatically enrol “eligible jobholders” as well as make a minimum employer
                               contribution towards it.”
 Which parties are involved?

• Department for Work and Pensions (DWP) is responsible for the workplace pension
  reform policy, the legislation, communicating about the changes, providing information
  about the nature and impact of the changes to individuals.
  – http://www.dwp.gov.uk/policy/pensions-reform/workplace-pension-reforms/

• The Pensions Regulator (TPR) will provide information about how employers can comply
  with their duties, by providing online information and guidance.
  – http://www.thepensionsregulator.gov.uk/pensions-reform.aspx

• National Employment Savings Trust (NEST) Corporation is the trustee body responsible
  for overseeing Nest (this was formerly PADA – Personal Accounts Delivery Authority)
 – http://www.nestpensions.org.uk/
When do these changes come into effect?
Employers will be given a date from which the change will have to be in place, this is
known as their “staging date”. This will be phased in over a 4 year period.

• The first staging dates will start in October 2012 and will continue through to 2016.
• Employers with the largest number of workers will have the earliest staging dates
  followed by small and then micro companies.
• The Pensions Regulator will contact each employer six to twelve months before the
  staging date to advise.

Staging dates can be checked here: -
Employers must…
 automatically enrol any eligible jobholders, who are not already members, into an
  automatic enrolment pension scheme from that eligible jobholder’s automatic
  enrolment date;
 enrol any non-eligible jobholders that request it into an automatic enrolment scheme;
 respond to opt-out requests appropriately, including the refund of contributions
 deduct member contributions and make employer contributions according to the
  requirements of their qualifying pension scheme;
 periodically re-enrol any eligible jobholders who are not members of a qualifying
  pension scheme;
 inform jobholders that they have been automatically enrolled or enrolled and that
   they have the right to opt out;
 provide entitled workers with access to a pension scheme if they request it;
 provide all their workers, even those already in a qualifying pensions scheme, with
 written information relevant to their category;
 keep a number of records in relation to each pension scheme and each jobholder;
 register with the Pensions Regulator giving details of the scheme and the number of
   people automatically enrolled.

Employers must not:
 Induce their jobholders to opt out
 Discriminate against employees seeking a pension.
Definitions of Workforce
Eligible Job Holder
•   Aged between 22 and SPA
•   Qualifying earnings are above the earnings trigger for automatic enrolment (£7,475)

Non Eligible Job Holder
•   Aged between 16 and 74
•   Qualifying earnings are above the LEL (£5,035) but below the earnings trigger for
    automatic enrolment (£7,475)
• Aged between 16 and 21 or between state pension age and 74
• Qualifying earnings are above the earnings trigger for automatic enrolment (£7,475)

Entitled Worker
•   Aged between 16 and 74
•   Qualifying earnings are not payable by the employer in the relevant pay reference

Assessing the Workforce

• Automatically enrol all “eligible jobholders” into the scheme (employee has 3
  calendar months to opt out). This will happen on a 3 year cyclical basis.
Assessing the Workforce

• Automatically enrol all “eligible jobholders” into the scheme (employee has 3
  calendar months to opt out). This will happen on a 3 year cyclical basis.
Assessing the Workforce

• Automatically enrol all “eligible jobholders” into the scheme (employee has 3
  calendar months to opt out). This will happen on a 3 year cyclical basis.
Assessing the Workforce

• Automatically enrol all “eligible jobholders” into the scheme (employee has 3
  calendar months to opt out). This will happen on a 3 year cyclical basis.
Assessing the Workforce

• Automatically enrol all “eligible jobholders” into the scheme (employee has 3
  calendar months to opt out). This will happen on a 3 year cyclical basis.
Qualifying Scheme
• Have provision of a “qualifying pension scheme” for your workers for example
  NEST (can choose their existing scheme or a new scheme)

  – Qualifying Pension Scheme –pension schemes that satisfy the minimum
    requirements prescribed in the Pensions Act 2008. There are different
    quality standards depending on whether the scheme is defined benefit (DB),
    defined contribution (DC), or hybrid. Further information can be found at

• Register with The Pensions Regulator and provide details of the “qualifying
  pension scheme” and number of people that have been automatically enrolled.

What does this mean to Employers?
• Tell all “eligible jobholders” they have been enrolled and they have the right to
  opt out if they want.

• Must contribute at least 3% of workers earnings (Defined contribution schemes
  will be phased in at 1%, 2% and 3%).

      – Oct 2012 to Sept 2016 total contribution will be 2% with a minimum of
        1% coming from the employer
      – Oct 2016 to Sept 2017 total contribution will be 5% with a minimum of
        2% coming from the employer
      – Oct 2017 total contribution will be 8% with a minimum contribution of
        3% coming from the employer

• Pay employer contributions for “eligible jobholders” to the scheme
What is NEST?
NEST is a qualifying pension scheme setup by the government to help employers
become compliant with the Workplace Pension Reforms from 2012.

NEST is designed to be:
• low cost
• open to any employer that wants to use it to meet the new duties
• an online pension scheme that's easy to use
• easy for you and your workers to understand
• run in members’ interests by NEST Corporation.

It is administered by the National Employment Savings Trust (NEST) Corporation

Find out more about NEST pension scheme from

   Know the size of       Identify your       Have you got a
    your Company          Staging Date      Qualifying Scheme?

                        Qualifying Scheme
   Be ready for Auto
                          and Provider         Assess the
Enrolment to commence
                            Literature         Workforce?
    at Staging Date
                           ready to go

 Enroll Employees and
         start           Mange Opt Outs
  Employee/Employer       and Refunds
                                              every 3 years

Thank You!


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