Zero Hours Contract Presentation - the University Offices

Pensions Auto-enrolment
Towards implementation
February 2013
nick.smith@admin.cam.ac.uk
Human Resources Division
1

Welcome
Nick Smith - Project Manager, Auto-enrolment
Sue Curryer – Head of Pensions Administration
Andy Harnwell - Pensions Accountant
Presentation will be placed on Pensions Section website
Do ask questions during the presentation
We cannot give financial advice
2

Background
• Objective is to provide a workplace pension for all
• Create the opportunity to save for retirement
• Additional to State pension provision
• Legal requirement for all organisations to auto-enrol those not in a
pension scheme
• Includes not eligible or opted out previously
• Phased introduction from October 2012 to 2017 dependent on
organisation size (“staging date”)
• Our implementation date is 1 March 2013
3

Workplace pension overview
• Eligibility criteria for auto-enrolment pension is age and earnings related
• If eligible auto-enrolled. Onus on individual to opt out
• Using “postponement” of enrolment into pension scheme
• Structured workplace pensions process covers:
• Required information & when documents distributed
• How & when individual can opt out & who can provide opt out forms
• Individual can opt back out within 90 days
• Opt outs re-enrolled every three years
4

Workplace pension eligibility (from 6 April 2013)
Under lower earnings
threshold (< £5668 pa)
Between lower earnings
threshold and earnings
trigger for automatic
enrolment (£5668 & £9439
pa)
Age 16-21
Age 22-State
Pension Age
State Pension
Age-Age 74
Entitled worker Entitled worker Entitled worker
Non-eligible
jobholder
Non-eligible
jobholder
Non-eligible
jobholder
Over earnings trigger for
automatic enrolment of
£9440 (and up to £41450
pa)
Non-eligible
jobholder
Eligible
jobholder
Non-eligible
jobholder
Definitions. Eligible Jobholders are “eligible” to join a scheme and must be auto-enrolled under the legislation. Non-eligible jobholders will
not be auto-enrolled as they do not qualify but have the right to opt-in to an auto-enrolment scheme. Entitled Workers are “entitled” to join
an auto-enrolment scheme but would not receive any contributions.
5

Joining Process & Eligibility Criteria
• Will use the “postponement” option under the legislation
• Reduces the likelihood of very small pension pots due to short work periods
• Postpone automatic enrolment for 3 months after staging date to 1 June
2013. Known as the “Deferral Date”
• At Deferral Date, will automatically enrol any worker if they are:
• are 22 or more years old;
• are younger than the State Pension Age;
• are earning £9,440 (2013/14) or more a year on a pro-rata basis; and
• are not already a member of a qualifying workplace pension scheme.
• x 6

Joining Process & Eligibility Criteria (cont.)
• Following the Deferral Date, if automatically enrolled into relevant
pension scheme will receive a joiner pack to confirm membership
• Do not need to do anything in respect of automatic enrolment unless
wish to join the relevant scheme before the Deferral Date
• Can opt in on request
• Cannot opt out of workplace pension until automatically enrolled and
received a joiner pack
• The joiner pack will provide details of how to opt out
• Opt out period is 3 months from receipt of joiner pack
• If opt out after 3 month period then have leavers options
7

Which Pension Scheme?
• Three schemes in future:
• Universities Superannuation Scheme (USS)
• Cambridge University Assistant’s Contributory Pension Scheme,
Hybrid Section (CPS)
• NOW: Pensions. New workplace pension for those not covered
above
• Scheme eligibility confirmed in individual communications
8

Pension Contribution Levels
• Contributions are based on pensionable pay
• USS scheme - 16% from the employer, 6.5% from member
• CPS scheme - 20.3% from the employer, 3% from the member
• NOW: Pensions - Following legislation, 1% each from employer &
member, escalating over time
• Receive tax relief on contributions
9

Process steps
• Formal workplace pension individual letters sent - early March
• Auto-enrolled in appropriate scheme if Eligible Jobholder - 1 June
• Joiner pack will follow from Scheme Administrators
• Opt out forms available - 1 June
• USS from USS website at http://www.uss.co.uk/SchemeGuide/Autoenrolment/Pages/default.aspx
• CPS from www.admin.cam.ac.uk/offices/pensions/autoenrolment/ or request
from Pensions Section in writing
• All opt out forms to be returned to Pensions Section
• Forms received by 12 th of month - no deductions. Opt outs after 12 th
reimbursed in next payroll
10

Key points
• Will automatically be enrolled into a pension scheme on 1 June 2013 if
eligible
• Joiner pack will follow
• Contributions commence in June payroll
• If wish to opt out get form & return to Pensions Section:
• If miss payroll cut-offs reimbursement in next payroll
• Have until 1 September 2013 to opt out
• After 1 September normal leaver
• Those not eligible assessed each month & enrolled if criteria met
11

Questions?
12