Insert main title here by AiAs3Vw8

VIEWS: 0 PAGES: 51

									NEREO

Automatic enrolment and the LGPS

Terry Edwards, Senior Pensions
Adviser, LGE

3 May 2012                         www.lge.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.
Introduction
Introduction

• Look at automatic enrolment rules for DB schemes

• Look at how this interacts with LGPS

• Not covering how it works if don’t offer LGPS to all /
  some of your workers (including workers who are not
  employees)

• Pensions Regulator will be in touch with you
Automatic enrolment timetable
• Starts 1 October 2012 (120,000+)

• Existing employer’s staging date over period to 1
  April 2017* based on numbers on employer’s PAYE
  payroll at 1 April 2012 (incl. pensioners and
  councillors)

  *Existing employers with 50 or more persons on PAYE scheme at 1 April 2012 but less than
  50 FTE workers – staging date is between 1 October 2015 and 1 April 2017.
  New employers setting up between 1 April 2012 and 30 September 2017 - staging date is
  between 1 May 2017 and 1 Feb 2018. New employers setting up from 1 October 2017 –
  automatic enrolment rules apply immediately.
Automatic enrolment timetable

• Employers with more than one PAYE ref number –
  largest PAYE scheme (number of persons)
  determines staging date that applies

• Employers who share a single PAYE scheme with
  other employers will all have same staging date,
  determined by that PAYE scheme
Automatic enrolment timetable
• Rules kick in from employer’s staging date

• Employer can delay automatic enrolment for eligible
  jobholders (type 1) beyond staging date* in respect
  of current, but not new, eligible jobholders (type 1)
  who are eligible to join LGPS on and before staging
  date

• Employer can opt to bring forward staging date
  * Was 4 years to October 2016. Extended to 4 years and 4 months beyond date section 3 of
  Act comes into force (still October 2016). DWP to consult on this being to October 2017.
Definitions
•   Worker = contract of employment / contract to
    perform services personally (excludes office
    holders e.g. councillors)
•   Jobholder = worker, 16 or over but under 75 with
    qualifying earnings
•   Qualifying earnings (gross) = >£5,035 and not
    more than £33,540*
•   Earnings = salary, wages, commission, bonus,
    overtime, SSP, SMP, ordinary + additional
    paternity pay, statutory adoption pay
    * Planned to rise to £5,564 and an upper limit of £42,475 (to align with National
    Insurance contributions lower and upper earnings limits)
Three types of employee
                 Age             16-21                   22-<SPA*                  SPA*-74
Earnings**

Under lower
earnings threshold                               Entitled worker (type 3)
(£5,035/)

Between £5,035/
                                             Non-eligible jobholder (type 2)
and £7,4750

Over earnings         Non-eligible                 Eligible jobholder       Non-eligible
trigger for automatic jobholder (type 2)           (type 1)                 jobholder (type 2)
enrolment
(£7,4750)
*State Pension Age            **Earnings: separate contracts treated separately
/Planned to rise to £5,564 (to align with National Insurance contributions lower earnings limit)
0Planned to rise to £8,105 (to align with the PAYE threshold)
New Employees
New employees
• Type 1 : New eligible jobholders
  - automatically enrolled into “automatic enrolment
    scheme”
  - can apply a 3 month waiting period (but employee
    can opt in)

• Type 2 : New non-eligible jobholders
  - can opt to enrol in “qualifying scheme”

• Type 3 : New entitled workers - can opt to enrol in a
  scheme
How will this work in LGPS?

• Currently, all employees 16+ and <75 eligible to join
  LGPS (except < 3 month contracts)

• Amend LGPS so that:
  - all eligible employees automatically join LGPS
    (incl eligible admitted body employees)
  - those with <3 month contracts can opt in
  - but still need to comply with Act and SIs
Info requirements – Types 1 and 2
• New employee with contract for 3 months or more
  will auto-join LGPS

• Within 2 months of start date, er to notify ee in
  writing
  - is active member of a “qualifying scheme” (and
    er must offer a “qualifying scheme” if ceases to
    offer LGPS)
  - where to obtain further pensions info
Info requirements – Type 3
• New employee with contract for 3 months or more
  will auto-join LGPS

• No information requirements (but if become Type 2
  or Type 1 send Type 1 / Type 2 letter within 2
  months)
Opt out rules
• Current LGPS opt out rules and procedures apply
Info requirements – Types 1, 2 and 3
• New employee with contract for less than 3 months
  will not auto-join LGPS

• Er to issue postponement notice within 1 month of
  starting
   - enrolment postponed
   - deferral date (max or 3 months from start date)
   - can opt in before end of deferral date
   - written election to er must be signed
   - electronic election must include statement
     “submitted personally”
   - details of where to obtain further pensions info
Info requirements – Types 1, 2 and 3
  - if eligible jobholder (Type 1) at end of deferral
    period will be automatically enrolled
  - the earnings trigger for Type 1 automatic
    enrolment (>£7,475*)


   * Planned to rise to £8,105 (to align with the PAYE threshold)
Optant out who subsequently becomes
Type 1 for first time
• Automatically enrol from date first becomes Type 1

• Provide “eligible jobholder” with information

• Provide Pensions Section with information
Info to eligible jobholder (Type 1)
• Before / within 1 month of automatic enrolment date
  tell jobholder:
  - they’ve been enrolled + enrolment date
  - contact details for scheme + for more pensions info
  - ee conts will be deducted from pay
   - express ee and er conts as % or amount of pen
     pay or qualifying earnings
   - confirm tax relief given under net pay arrangement
  - if ceases to be eligible for LGPS, er must provide
     new qualifying scheme
  - give loads of info on right to opt out / back in
Info to Pensions Section (Type 1)
• Before / within 1 month of enrolment date tell AA:
  - name, gender, DOB, NI number**
  - home address (and work address*)
  - e-mail (work if provided, home if known) *
  - automatic enrolment date
  - gross earnings in pay ref period *
  - ee and er conts as % or amount of pen pay or
   qualifying earnings *
 * AA can state that they do not require this info ** Or within 1 month of receipt of NI number
Optant out who subsequently becomes
Type 2 for first time
• Provide “non-eligible jobholder” with information
Info to non-eligible jobholder (Type 2)
• Before / within 1 month of first meeting conditions for
  being a “non-eligible jobholder”, employer must tell
  jobholder:
   - can opt to enrol in the “qualifying scheme” i.e.
     LGPS (to which er will contribute)
   - written election to er must be signed
   - electronic election must include statement
     “submitted personally”
    - details of where to obtain further pensions info
  Note: if opts to enrol, enrolment date is first available pay ref period and info requirements
  would be the same as for Type 1
Optant out who subsequently becomes
Type 3 for first time
• Provide “entitled worker” with information
Info to entitled worker (Type 3)
• Before / within 1 month of first meeting conditions for
  being an “entitled worker”, employer must tell worker
  - can opt to join a scheme (i.e. LGPS)
  - written election to er must be signed
  - electronic election must include statement
    “submitted personally”
   - details of where to obtain further pensions info
  Note: if opts to join, enrolment date is in accordance with LGPS rules and info requirements
  to Administering Authority are the same as for Type 1 except don’t have to provide enrolment
  date (but will do so in practice). No equivalent of Type 1 info requirements to the worker.
Can optants out who become Type 1
opt out?
• Yes - after enrolled

• Prescribed form (from AA)

• Can opt out up to one month* after later of enrolment
  date or date er gave enrolment info


  * 6 weeks if first form filled in incorrectly
  Note: can still opt out of LGPS after one month / 6 weeks but this is then under the
  LGPS opt out rules
Can optants out who opt in on
becoming Type 2 opt out?
• Yes - after enrolled (but can opt out / rescind opt in
  before enrolment date)

• Prescribed form (from AA)

• Can opt out up to one month* after later of enrolment
  date or date er gave enrolment info

  * 6 weeks if first form filled in incorrectly
  Note: can still opt out of LGPS after one month / 6 weeks but this is then under the LGPS opt
  out rules
Can optants out who opt in on
becoming Type 3 opt out?
• Yes – under LGPS rules
Process after opting out – Types 1 + 2

• Er must inform AA of opt out

• AA must refund to er, any ee and er conts paid to
  Fund

• Er must refund ee conts

• Refunds to be paid within one month of receipt of opt
  out form (unless payroll missed, then by end of next
  pay period)
Keeping records on optants out – types
1 +2
• Er must keep copy opt out form for 4 years

• AA must keep name of optant out, date er notified
  AA of option out, date of cessation of membership
How will this work in LGPS?

• Suggest, regardless of staging dates, AA require all
  employers to standardise opt out forms / procedures
  from, say, 1 October 2012 (using prescribed form)

• Suggest this covers Types 1, 2 and 3

• Subject to DCLG making amendments to LGPS
Do Type 1 optants out have to be re-
enrolled?
• Yes - within 3 months before / after 3rd anniversary of
  staging date (provided continuous employment, and
  not opted out within previous 12 months, and is type
  1 on re-enrolment date)

• Thereafter, within 3 months before / after 3rd
  anniversary of previous chosen re-enrolment date

  Information requirements same as for automatic enrolment
  Opt out procedures same as for automatic enrolment
Do Type 1 optants out have to be re-
enrolled - continued
• But if ceases to be Type 1 (becomes type 2 or 3), and again
  becomes Type 1 before re-enrolment date without a break,
  don’t have to enrol then, but do have to on re-enrolment date
  (provided still type 1 on re-enrolment date)
• But if ceases to be Type 1 (becomes Type 2 or 3), and again
  becomes Type 1 after re-enrolment date without a break,
  don’t have to enrol when again becomes Type 1
• So, Type 1 only enrolled on staging date, or on first becoming
  Type 1 after staging date, or on re-enrolment date if Type 1
  on that date
Note: if ceases employment and recommences as Type 1, then treat as new Type 1
What about Type 2 and Type 3 optants
out / non-joiners?
• If type 2 or Type 3 at each triennial anniversary of
  staging date, no need to communicate with them
Existing Employees
What about Type 1 and Type 2
jobholders who, at the staging date, are
already in LGPS?
• Remain in LGPS

• Within 2 months of staging date, er to notify ee
  - remains active member of a “qualifying scheme”
   (and er must offer a “qualifying scheme” if ceases to
   offer LGPS)
  - where to obtain further pensions info
Note: technically can apply transitional delay period to these too.
What about Type 3 workers who, at the
staging date, are already in LGPS?
• Remain in LGPS

• No info requirements (but could notify ee that will
  remain in LGPS)
What about existing Type 1’s with
contract for less than 3 months?
• Automatically enrol from the staging date unless
  apply a 3 month postponement period (but employee
  can opt in*) or employer applies the transitional delay

• If automatically enrol - info requirements same as for
  new Type 1

• If use 3 month postponement period – postponement
  info requirements same as for new Type 1
  postponement
 * Requires amendment to LGPS Regulations to permit this.
What about existing Type 1 optants
out?
• Automatically enrol from the staging date (even if
  opted out within 12 months prior to staging date) –
  info requirements same as for new Type 1

• But employer can opt for transitional delay*



  * Was 4 years to October 2016. Extended to 4 years and 4 months beyond date section 3 of
  Act comes into force (still October 2016). DWP to consult on this being to October 2017.
If employer opts for transitional delay
for Type 1 optants out
• Within 1 month of staging date notify jobholder
  - automatic enrolment deferred to end of transitional
    period but can elect to join the LGPS (a “qualifying
    scheme”) to which er makes a contribution
  - written election to join must be signed
  - electronic election must include statement
    “submitted personally”
  - details of where to obtain further pensions info
If employer opts for transitional delay
for Type 1 optants out
• Must automatically enrol at end of transitional period
  (provided still type 1 at end of that period)

• But if ceases to be Type 1 (becomes type 2 or 3),
  and again becomes Type 1 after end of the
  transitional period, enrol when first becomes
  Type 1 again

Note: if ceases employment and recommences as Type 1, then treat as new Type 1
What about existing Type 2 and Type 3
optants out?
• Type 2 and Type 3
  - give same information as for new employee about
    right to opt in from staging date (or date they first
    become Type 2) even if opted out within 12 months
    prior to staging date, and
  - automatically enrol from date first become Type 1
What about existing Type 2 and Type 3
with contract for less than 3 months?
• Type 2 and Type 3
  - give same information as for new employee about
    right to opt in from staging date (or date they first
    become Type 2) even if opted out within 12 months
    prior to staging date

• Or use 3 month postponement period
Bits and Pieces
Contributions

• Conts to be paid over electronically by 22nd of
  following month (or by 19th in any other case)

• Except in opt out period, where conts have to be
  paid over by end of second month after the month
  which includes the automatic enrolment date
Compliance

• If conts not collected and paid over within 3 months
  of due date, er can be made to pay all conts (ees
  and ers)

• Regulator has powers to impose penalties for non-
  compliance with contravention notices
Registration

• Er to provide Pensions Regulator with info, within 4
  months of staging date (and of re-enrolment date)
  saying how they have complied with their duties
Record keeping

• Er and AA to keep records to enable Regulator to
  check compliance

• Records normally to be kept for 6 years
Issues
• How can AA find out staging date for employer?

• AA to consider standardising info requirements from
  ers from, say, October 2012

• Opt out procedures and processes
Issues - continued

• Ers responsible for enrolment / re-enrolment process

• Should er opt for earlier staging date?

• 3 month delay

• Should er use transitional period?
Issues - continued
• Payover of conts relating to opt out period

• Ers who don’t offer LGPS to all ees

• Ers who want to cease offering LGPS

• Fixed protection

• Will new LGPS be a qualifying scheme?
    Any questions?
(and thanks for listening)

								
To top