Automatic Enrolment (Basic Guide for LG Employers)

Automatic Enrolment (Basic guide for LG employers)

1Background

Automatic Enrolment has been established by the Government as a requirement for employers to provide a pension scheme for employees, each employer will be notified of the date from which they will have to comply with Automatic Enrolment requirements, their‘staging date’ depending on the size of their PAYE at 31 March 2012 which will be between 1 October 2012 for the largest employers and 1 April 2017 for the smallest . The LGPS is a qualifying scheme for the purposes of Automatic Enrolment within the terms set out by the Pension Regulator and the actions that have been routinely carried out previously comply with the majority of the requirements set out by The Pensions Regulator (TPR), however there are requirements that do need a change in processes, these are:

• Treatment of members who do not want to be in the pension scheme
• Ensuring that the employer cannot be accused of affecting members decision to opt out of the pension scheme
• To bring anyone who is not in the pension scheme back into pension scheme (known as pension savings) every three years
• Treatment of any employee not in a qualifying scheme as they hit age 22
• Treatment of any employee not in a qualifying scheme if their earnings hit a salary trigger (currently £786.66 per month)

It is worth noting that The Pension Regulator has been appointed by the Government to police the introduction of Automatic Enrolment and they have the powers to issue substantial fines to any employer who is not complying.

2Employer decisions

Postponement:- An employer can use postponement for a period of up to 3 months , which means that you can delay bringing a member into the pension scheme for up to 3 months. This can be on either an individual basis or for all staff or a select group of staff. Within the LGPS this is often valuable for casual staff who may have either exceeded the threshold in an odd month, or hold short term contracts. It should be noted that you are required to notify anyone for whom you are using postponement, that you are using postponement, but they still have the right to join the pension scheme should they wish.

Transitional delay:- An employer that is an active member of a defined benefit scheme (like the LGPS) can use transitional delay whereby any employee who has previously opted out is not brought into the pension scheme until 1 October 2017, however if an employer chooses to take this approach he will need to take the following actions:

• Write to all employees whom you are applying transitional delay explaining that you are doing so and that they have the right to join the pension scheme should they wish
• You will need to bring them into a pension scheme that qualifies for Automatic Enrolment purposes should eligibility to the LGPS be stopped.
• If an employee’s salary drops below the trigger salary (currently £786.66 per month) and then subsequently increases above this trigger they would need to be AE.

3How to notify LPFA of joiners

The LPFA have established 2 routes to provide the information relating to new joiners to the pension arrangements either through AE or general appointments/recruitment.

(1)On line joiner/(2)Spreadsheet

Both approaches require submission of the data through our secure website the employer’s administrator is required to establish user rights to the Automatic Enrolment and the Online Forms sections. Site administrator guide explains how to change Your Fund user’s permissions.

The information required to be included is the same for each approach together with guidance

Name / Format / Comments
NINUMBER / AA111111A (2 Alpha characters followed by 6 numbers and final alpha character) / We can no longer accept temporary NI numbers due to the pension regulator’s data quality checks
TITLE / Mr, Mrs, Miss, Ms, Dr, Cllr, Sir or Prof only
SURNAME / Must be at least 2 Alpha characters maximum 25 characters
FORENAMES / Must be at least 1 alpha character maximum 25 characters
SEX / M/F / Male/Female
DOB / 11/11/1981 (example) / Member should be at least 16 years old and younger than 75 to be contributing. Format should be 01/01/1980
PARTNERSHIP STATUS / M, C, S, D, W, U only / M = Married,
C = Civil Partnership,
S = Single,
D = Divorced,
W = Widow(er)
U = Unknown
ADDRESS LINE 1 / Flat Number, House name or first line of address must be entered. Maximum of 30 characters.
ADDRESS LINE 2 / Second line of address must be entered, street name or town. Maximum of 30 characters.
ADDRESS LINE 3 / Please leave blank if no additional address data held
ADDRESS LINE 4 / Please leave blank if no additional address data held
ADDRESS LINE 5 / Please leave blank if no additional address data held
POSTCODE / AA11 1AA or AA1 1AA or A1 1AA or A11 1AA / There must be a postcode present. Maximum 8 characters.
MEMBER EMAIL ADDRESS / Alphanumeric cell / Up to 70 Characters
EMPLOYER CODE / The format should be 00001 / Number cell. Maximum 5 characters.
JOBTITLE / Alpha cell. Maximum 20 characters
PAYROLL/POST NO / Any format accepted
Example
123456
12345X
123456-2
A123456 / If you do not use payroll numbers please insert the members NI number. Please enter a valid payroll or post number with a maximum of 12 characters. Preferably this should be a unique number that identifies the particular pensionable employment.
DJE / 11/11/2000 (example) / Date joined employer
DJS / 01/11/2013 (example) / Date joined scheme
PT INDICATOR / FT, PT, TT, VT / FT:Full Time,
PT:Part Time,
TT:Term Time, VT:Variable Time
CON HOURS / 20.50 (example for person working 20 hours 30 minutes each week) / Please enter the contractual hours for this post. If FT indicated this cell can be left blank. Please note: Contract hours must be at least 00.01.
FTE HOURS / 35.00 (example for person whose full time hours would be 35 each week) / If member is part time, variable time or term time only please complete the full time equivalent hours. If full time indicated this cell can be left blank.
CON WEEKS / 44.00 (Example for a member working 44 weeks each year) / Please enter contractual weeks for this post. This should include the weeks worked plus any annual leave and bank holiday entitlements. Only applicable if not working 52.14 weeks per year.
FTE WEEKS / 52.14 / A full year is 52.14
ANNUAL PAY RATE / £11,111.11 (example) / Total annual pensionable pay.
ANNUAL FTE PAYRATE / £22,222.22 (example) / Total annual full time equivalent pay.
CONT RATE / Members contribution percentage rate based on FTE pay
LGPS Contribution Rates
Up to £13700 = 5.5%
£13701 - £16100 = 5.8%
£16101 - £20800 = 5.9%
£20801 - £34700 = 6.5%
£34701 - £46500 = 6.8%
£46501 - £87100 = 7.2%
Over £87101 = 7.5%
Fire Contribution Rates:
Up to £15000 = 8.5%
£15001 - £21000 = 9.1%
£21001 - £30000 = 9.6%
£30001 - £40000 = 9.9%
£40001 - £50000 = 10.1%
£50001 - £60000 = 10.2%
£60001 - £100,000 = 10.5%
£100,001 - £120,000 = 10.8%
Over £120,001= 11.1% / These bands will be amended on an annual basis
OTHER INFORMATION / Free format, up to 100 characters for any additional comments you would like to add.

Details shown in red are compulsory

Details shown in green are not compulsory

Details in blue is compulsory and will reject any dates that make the member under age 16 or over 75

Orange is compulsory and please note: DJS can be equal to DJE however DJE must not be later than DJS

Purple relates to part time rules see below:

PT Indicator Validation Rules

- FTE Weeks is always 52.14

- If PT Indicator is Full Time (FT) then you do not have to complete any information within columns Contract Hours, FTE Hours, Contract Weeks and FTE Weeks.

- If PT Indicator is Part Time (PT) then Contract Hours and FTE Hours are compulsory, and you do not have to complete any information within Contract Weeks column.

- If PT Indicator is Term Time (TT) then Contract Hours, FTE Hours and Contract Weeks are compulsory.

- If PT Indicator is Variable Time (VT) then FTE Hours, Contract Hours and Contract Weeks should be available for the employer to complete but should not be compulsory.

- The figure in Contract Weeks should never be higher than the figure in FTE Weeks.

- The figure in Contract Hours should never be higher than the figure in FTE Hours

- The FTE Weeks figure should never be greater than 52.14

Further Validation:

Temporary National Insurance numbers will not be accepted.

All date format should be in DD/MM/YYYY.

The '£' symbol is not required for annual pay rate and FTE pay rate. All payment figures are assumed in pounds sterling. If any other currency is paid please add a comment in the 'other information' cell.

Validation will check the FTE pay rate against the pension contributions percentage.

If PT indicator is Part Time, Variable Time, Term Time or Casual, annual pay rate is compulsory.

If PT indicator is Full Time annual pay rate is not compulsory.

If Variable Time, hourly rate maybe provide rather than annual pay rate please confirm by adding a comment in the 'other information' cell.

Help is built into the spreadsheet and on line joiner facility but if you encounter any problems you should ring 0207 369 6283

Finally the spreadsheet has an auto format button to be pressed which will convert the spreadsheet to the accepted format required for the Your Fund system. It will also highlight in red any areas that are missing or maybe incorrect and require further investigation before you upload the spreadsheet to the Your Fund website.

Once a file is uploaded please follow the instructions on the screen. Any data that is rejected will not be processed any further.A reason for the rejection will be illustrated and you are able to export this data to excel. You will be required to either complete an individual online form or submit a new upload. You can cancel the whole batch correct the rows and resubmit.

If you submit duplicate data this will be shown on the screen and will ask if you wish to continue or cancel the batch uploaded.

4What happens once we receive the joiners/spreadsheet

The LPFA will write to any new scheme members with details of the pension scheme including the route to opt out. If the member wishes to opt out they will be directed to the Your Pension website ( however they cannot opt out until both the details have been set up on our system (via spreadsheet or e form) and they have reached the start date in the scheme. If however they do not have access to a computer they are advised they can ring the LPFA to request a manual form.

5How you receive notifications of opt outs

If a member chooses to opt out online, a notification will be sent to the employer on the yourfund website with an email sent to whoever submitted the spreadsheet/e-form joiner overnight.

When the employer accesses the yourfund site the details of the member opting out together with the instruction either to:

• Refund all pension contributions through the payroll (if the member opts out within 3 months) or
• If the member has greater than 3 month membership a link to the on line leaver form is provided with an instruction to withdraw the member from the next month’s payroll and submit an on line leaver form to the LPFA.

All optants will be listed with a radio button for the employer to ‘tick’ once they have cleared the case. If you do not tick this button the next time you access yourfund the remaining cases will be notified to you.

6Each subsequent month

Once you have dealt with the first month following your staging date, it would be a mistake to consider that all actions have been completed. Each month the following staff would need to be AE

• New recruits
• Any non scheme member who reaches age 22
• Any employee whose salary is greater than £786.66 per month for the first time

7Third year anniversary

Every three years from your staging date, you must bring any employee who has opted out, back into the pension scheme (unless covered by transitional delay), you can use a 3 month postponement if you wish this might be particularly useful if your staging date falls near a year end time frame.

8End of transitional delay

On the 1 October 2017 any employee who has been covered by transitional delay is required to be brought into the LGPS at 1 October 2017 and then furtherre-enrolled on third year anniversary of that employers staging date basis should they opt out.

9Registration

Finally you have 3 months from your staging date to register with The Pension Regulator, the help form to assist you in doing this is attached.