A guide to Workplace Pension Reform & the NHF pension scheme

Transcription

1 A guide to Workplace Pension Reform & the NHF pension scheme Taking the headache out of auto enrolment with a value for money scheme to help ensure you comply with legislation In consultation with:

2 Auto enrolment scheme A guide to Workplace Pension Reform & the NHF pension scheme. contents WHAT YOU NEED TO KNOW ABOUT AUTO ENROLMENT Keep calm and get ready 3 What is auto enrolment? 3 When do I need to act? 4 Why should I choose the NHF scheme? 4 Who should I enrol? 4 Minimum contributions 5 THE NHF PENSIONS SCHEME What is the NHF pension scheme? 6 What are the benefits? 6 How much is it going to cost? 7 How do I sign up? 7 QUESTIONS: 8 The legal bit 9 a guide 2

3 WHAT YOU NEED TO KNOW ABOUT AUTO ENROLMENT In the UK we re living longer and more active lives than ever before, but this means that we are spending longer in retirement than ever before too. When the state pension was introduced for over 70 s in 1909, the average life expectancy was around 45 years old. These days we re living on average 30 years longer, and the government has taken steps to ensure we all have a comfortable retirement by introducing far reaching workplace pension reforms, making sure we all save for later life. The Pensions Act 2008 introduced new legislation to create a savings culture in the UK, requiring employers to enrol all eligible workers on a compliant pension scheme. This is known as Workplace Pension Reform or automatic enrolment. This guide will take you through the new legislation, explain your legal obligations and take you through the NHF scheme. KEEP CALM AND GET READY... At NHF, we knew that auto enrolment might be daunting for the hair and beauty industry; so we ve been working with pensions experts Wren Sterling to create a scheme, with guaranteed acceptance for hair, barber and beauty salon owners, low costs and easy to use software to help you implement the scheme in your salon. WHAT IS AUTO ENROLMENT? Put simply, all employers must comply with the legal requirements for auto enrolment, which are: 1: To provide ALL of your workers with access to a qualifying workplace pension scheme 2 To automatically enrol ELIGIBLE workers into a qualifying workplace pension scheme 3: To pay a minimum level of contributions It s possible that if you already have a pension scheme in place, your business may already be compliant however, you will need to talk to your provider /advisor to make sure that your existing pension scheme meets the new requirements. T: E: NHFpensions@wrensterling.com W: 3

4 Auto enrolment scheme WHEN DO I NEED TO ACT? The Pensions Act came into force in October 2012, starting with larger companies. It will be rolled out to medium and smaller companies over the next 3 years. By 2018 all UK companies with one or more employees should have implemented auto enrolment. All affected businesses have been allocated a staging date determined by their PAYE reference. To find out when you will be staging log onto The Pensions Regulator website, and enter your PAYE number. WHY SHOULD I CHOOSE THE NHF SCHEME? With over 1 million businesses staging between 2015 and 2018, there may well be significant capacity issues within the pensions industry, with providers able to pick and choose who they sign up. The choice of pension schemes becomes even more limited if you have less than 5 employees, with few mainstream providers willing to take on companies of such a small size. Of course, even with these limitations there are other options available to the industry however you will need to do your research and evaluate the true costs to your business in terms of time and money to make sure you make the right choice for your salon. Some solutions have no set up costs (such as the NEST scheme) but may not include extras that are included with the NHF pensions scheme, such as the dedicated software. You will be able to upload your payroll information to the software, which will then work out which of your workers need to be automatically enrolled. It will also help you to stay compliant, by creating all the necessary communications from you to your employees about the scheme. WHO SHOULD I ENROL ON THE SCHEME? You need to asses all your workers to see if they re eligible, but you may not have to enrol all of them on the scheme. The table below shows the minimum requirements for employees to be enrolled on the scheme, based on their annual earnings: Annual earnings ( ) Age 16 to to state pension age State pension age to 74 5,824 or below Has a right to join a pension scheme Over 5,824 to 10,000 Has a right to opt in Over 10,000 Has a right to opt in Automatically enrol Has a right to opt in Figures correct as of 2015/16 from The Pensions Regulator. T: E: NHFpensions@wrensterling.com W: 4

5 HOW MUCH DO I NEED TO CONTRIBUTE? Under the new regulations, employers and employees need to make a minimum level of contributions to the scheme. You will need to deduct your employee s contributions and make sure you pay them on time. The NHF pension scheme software will help you automate this process. You will need to decide what you re going to base your contributions on as there are four different ways of assessing salary, and therefore how much you and your employees will have to pay into the scheme. Each employer needs to work out which method is most appropriate for them. 1. Banded earnings: contributions are paid on all of the employee s PAYE earnings between 5,824 and 42, Pensionable earnings: these are based on an employee s earnings from the first 1 and there are three ways to calculate them. a. Basic salary contribution will be based on an employee s basic salary only not including bonuses, tips, commission etc. b. Pensionable earnings contributions are based on pensionable earnings which must be at least 85% of the employee s total PAYE earnings. c. P60 earnings contributions are based on the employee s total P60 earnings. The table below shows the minimum contributions for each option. This table shows the full rates of pension contributions, which will be in force from October All of these percentages will be phased in from your staging date through to October Banded earnings Pensionable earnings Basis Between 5,824 and Based on earnings from the first 1 42,385 Min conts 8% 9% 8% 7% Min Employer conts 3% 4% 3% 3% Employee conts Up to 5% Up to 5% Up to 5% Up to 4% Definition of earnings n/a Based on basic Pensionable P60 earnings salary earnings must be at least 85% of total Certification required No Yes It is up to the employer which method they use to calculate salary the NHF pension scheme software enables you to choose any of the above methods. T: E: NHFpensions@wrensterling.com W: 5

6 Auto enrolment scheme NHF PENSIONS AUTO ENROLMENT SCHEME What is the NHF pension scheme? It s a fully compliant workplace pension scheme to help your employees save for retirement. You are responsible for arranging and implementing the scheme, which is set up under trust and administered by HS Administrative Service appointed by the Scheme Trustees. You will be sent full details of the scheme in the welcome pack you ll receive when you register online. There is also further information on the NHF pensions website KEY BENEFITS OF THE NHF PENSION SCHEME Easy registration process Guaranteed acceptance for hair, barber and beauty salon owners Free, simple and easy to use software Access to advice through Wren Sterling Low charges for employers and employees Telephone helpline A fully governed default investment fund Corporate governance Open to NHF members and non-members 6

7 HOW MUCH IS IT GOING TO COST? One of the major considerations for our members was cost access to independent financial advice can be expensive and off the shelf solutions may not be appropriate for everyone. We wanted to make sure the auto enrolment solution we offered was easy to understand and implement, but also good value for money. To this end, we ve made sure the costs are clear, with no hidden surprises. NHF members registration fee: VAT a one-off registration fee to set up your scheme. This is a special price until 31st August 2015, when it will revert to the full price of VAT. Even if your staging date is some way off, you can register before 31st August 2015 and pay the reduced registration fee, with no other contributions or fees due until your staging date. NHF members annual governance fee: 65 + VAT per year. This covers the corporate governance of the scheme, making sure it is compliant with current legislation. Non-members registration fee: VAT a one-off registration fee to set up your scheme. Non-members annual governance fee: VAT per year. This covers the corporate governance of the scheme, making sure it is compliant with current legislation. Employee costs: Annual management charges, 0.60%* and 1 per month - these are the only charges for investing in the default fund. Other funds may carry a higher charge. plus 1 per month per employee. These costs are the same for employees of NHF members and non-members. Advice: You can access expert financial advice through Wren Sterling. There may be additional costs for this advice, but you will receive a breakdown of indicative costs in your welcome pack. You will never be charged anything in addition to the above costs that you haven t agreed in advance. WHAT S NEXT Go to and register for the scheme. If you are still unsure and want further advice our NHF pensions helpline is here to help and one of our dedicated team at Wren Sterling can answer your questions. Phone number: nhfpensions@wrensterling.com For general membership enquiries please contact the NHF membership team: Phone number: enquiries@nhf.info THE PENSIONS REGULATOR As well as the NHF pensions website, you can find lots of information on auto-enrolment on the Pensions Regulator website *For example, if the total amount invested is 1000, the annual management charge would be 6.00 T: E: NHFpensions@wrensterling.com W: 7

8 Auto enrolment QUESTIONS? But I thought... There are quite a few misconceptions about auto enrolment, here we dispel some of the most common: I ve asked my employees and they don t want a pension scheme, so I don t have to do anything. Employees can opt-out of auto enrolment if they want to but employers still have to comply with the legislation and offer a qualifying scheme. I ve only got one employee apart from me, so I don t think this applies to me. This legislation applies to ALL employers with one or more employees, so even if you only have one employee in addition to yourself, you still need to implement auto enrolment. I ve checked and my staging date isn t until next year, so I don t need to do anything until then. Your staging date is the date from which you must offer a qualifying pension scheme, so you will need to make preparations beforehand. You may want to consider setting up and getting ready at least 6 months before your staging date, so you re all ready to go. Most of my employees are part-time, so I won t need to do anything. Eligibility is actually based on earnings and age, rather than hours worked, so you will need to go through the process of assessing each employee before you can be sure. Even if you don t have any eligible workers who would need to be automatically enrolled, you will still have to put in place a qualifying scheme in case any of your non-eligible workers want to join. The NHF software will check eligibility for you you simply input your payroll information and it will tell you which of your employees are eligible. What do I do now? If you re ready to start the process simply visit: and register for the scheme. What if I need help? If you have further questions about contributions, an existing scheme or anything else, we have listed a few resources that are available to help you find the answers. uestions? 8

9 Credit: Neal Reed THE PENSIONS REGULATOR As well as the NHF pensions website, you can find lots of information on auto-enrolment on The Pensions Regulator website: THE LEGAL BIT The NHF pensions scheme is subject to English law. COMPENSATION The investments may be covered by the Financial services compensation scheme. This may not apply to investments managed by external managers. Aegon funds are included. Insurance business of this type is generally covered for 90% of the value of the whole claim, without limit. You can get more information about compensation arrangements from the Financial services compensation scheme by calling or visiting TRUSTEES The Trustees are Wragge Lawrence Graham & Co Pension Trustees Ltd. FINANCIAL CONDUCT AUTHORITY REGISTER The NHF pension scheme is a brand name of SALVUS Master Trust. Wren Sterling is a trading name of Wren Sterling Financial Planning Ltd, which is authorised and regulated by the Financial Conduct Authority. The Financial Services Register number is Registered office: 5th Floor, Cutlers Exchange, 123 Houndsditch, London, EC3A 7BU. Registered in England No NHF PENSIONS AUTO ENROLMENT SCHEME This guide is designed to assist both NHF members and non-members in complying with their duties. This guide is not intended to be a definitive way of complying with the duties of the Pensions Act 2008 and the regulations made under the Act. NHF pensions cannot provide a definitive interpretation of the law; only the courts can do this. If you have any doubts of your legal rights or obligations, please seek legal advice. T: E: NHFpensions@wrensterling.com W: 9

10 To join the NHF auto enrolment pension scheme Call us on: or us: * Terms & Conditions apply. For full terms and conditions visit our website