New pensions auto-enrolment earnings thresholds effective from 6 April 2014.
The earnings trigger, which determines whether an individual should be auto-enrolled, has increased from £9,440pa to £10,000pa.
The band of qualifying earnings on which minimum contributions must be based has also been increased to between £5,772 and £41,865.
Auto-enrolment is intended to get more people saving into a pension scheme to provide for their retirement. At present around half of all employees in the UK are not members of any occupational pension scheme and are not making any provision for their retirement. With life expectancy continuing to increase, the Government is concerned that many people will not have enough income to support their retirement years. Further information is available from the gov.uk website. The UK is not the first country to introduce a scheme of this kind; similar arrangements operate in Norway and New Zealand to name just two examples.
It is being applied to employers at different times, depending on their size. The largest employers had to introduce Auto-Enrolment from 1 October 2012. The new rules applied to the University from 1 May 2013.
Potentially it affects any worker who meets all of the following criteria:
The pension schemes supported by the University are;
Once you have been auto-enrolled, you will have an option to opt-out of the pension scheme and receive a refund of your first contribution. There is a time limit of one month in which to do this (3 months for the USS), and you will have to contact your pension scheme to make this happen; the University is prohibited, by law, from helping you to opt-out. The University will inform you when you are auto-enrolled and tell you of your options, including the right to opt out.
Your future may be longer than you think! Life expectancy is increasing rapidly; it is about 8 years greater now than it was just 40 years ago in the 1970s and that increase is showing no signs of slowing down. While the state social security system will provide enough to survive on, it is clear that a good quality of life will require something more than will be available from the state. You can provide this either by continuing to work, or by saving now to have funds to enjoy in the future - and a pension is a tax-efficient way of doing this that also receives contributions from your employer.
Good news - if you are an active member of one of these schemes, paying contributions either directly or via salary sacrifice/pensions+, then you will not be affected by these changes and need do nothing. If you cease being a contributing member of the scheme while continuing in employment, you will be subject to assessment for auto-enrolment.
If you meet the criteria set out below, and are not an active member of any of our pension schemes, the University is required to auto-enrol you into a suitable pension scheme.
The criteria for auto-enrolment are:
You will be auto-enrolled into the National Employment Savings Trust (NEST) unless you are an academic or other member of staff on Grades F to I or equivalent, in which case you will be auto-enrolled into the USS. If you are already in receipt of a USS pension you will be auto-enrolled into NEST. You will receive a notice from the University telling you that you have been auto-enrolled and advising you of your options, including the right to opt out. This will normally be sent as an email - so it is important that you provide us with an email address. If an email address is not available please ensure we have your correct home address and let us know if it changes (contact your HR team with any changes in your contact details) Once you have been auto-enrolled, you will have an option to opt-out of the pension scheme and receive a refund of your first contribution. There is a time limit of one month in which to do this (3 months for USS), and you will have to contact your pension scheme to make this happen; the University is prohibited, by law, from helping you to opt-out. Information regarding opting out by telephone or email and links to the opt out page on the website will be available in your NEST membership pack. If you decide to opt out by using the paper opt-out form from the NEST contact centre, you should send the completed form to the Payroll and Pensions Office in King's Gate at the University. You will need to opt out within one month from receipt of the pack - the deadline date is clearly stated in the pack. You will receive a full refund of all your contributions and will be removed from the scheme.
If you want to stop making payments after the end of the one month opt-out period you can do so. The payments you have made already will not be refunded.
The duration of the contract is immaterial - the assessment for auto-enrolment is carried out each month, on the earnings that you receive in that month. If you are not an active member of either the USS, RBP or NHSPS in respect of the work that you are doing, you will be assessed for auto-enrolment as set out in section 3 above.
The auto-enrolment regulations apply to you if you meet the criteria:
Any payment that you receive in any one month that reaches or exceeds the earnings threshold will trigger auto-enrolment. This will apply even if you are already a member of a pension scheme via another employer, or have been auto-enrolled by another employer. If you are not an active member of the USS, RBP or NHSPS in respect of the work that you are doing, you will be assessed for auto-enrolment as set out in section 3 above.
The auto-enrolment regulations continue to apply. If you meet the criteria;
You will be auto-enrolled into a suitable pension scheme. A USS pensioner will be auto-enrolled into NEST if the above criteria are met. See section 3 above for details of the assessment.
Your letter of appointment and conditions of service will tell you which pension scheme you may join, and which scheme you will be auto-enrolled into if you do nothing, subject to your meeting the auto-enrolment criteria;
It does not matter if you are a member of another pension scheme through another employment, or if you have been auto-enrolled by another employer; the auto-enrolment regulations require each employer to assess its own workers, and to apply auto-enrolment to them if they meet the criteria for that employer. The criteria are;
See section 3 above for more information on the assessment.
You can opt out after you have been auto-enrolled, but not before. The opting out process is handled by the pension scheme, which will provide the necessary forms etc. The University is prohibited by law from involvement in the opting out process, but it will tell you when you are auto-enrolled and of your rights to opt out.
There have been briefings for managers which are available.