Automatic enrolment - Preparing for the challenges


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In this recorded MasterClass from 20 February 2018, we share our technical guidance focusing on Automatic Enrolment (AE) elements:

  • AE step ups
  • AE and restrictions to the annual allowance
  • re-enrolment
  • the recent AE review.

By the end of this MasterClass you will be able to explain:

  • phasing in of contributions
  • the interaction between AE minimums and the annual allowance
  • cyclical re-enrolment.
  • Alex McCallum: Good morning, everyone. And welcome to the latest Scottish Widows TechTalk MasterClass. My name is Alex McCallum. I'm a workplace pension specialist here at Scottish Widows. And I'm delighted to be introducing today's call. In today's presentation, Chris and Tom from our financial planning team will be focusing on auto enrolment. This is a particularly relevant time to be hosting a master class on this topic.

    In October 2017, we marked the fifth anniversary of automatic enrolment and this month the final staging dates for existing businesses have been met. Now if you're like me and have been heavily involved working with employers during these five years, I'm sure you'll agree that auto enrolment has been a fundamental change for businesses around the UK. 

    Every employer with eligible workers now has a workplace pension and any new businesses set up today need to comply with the rules immediately. So providing a pension is now a central part of each and every employer's business processes. 

    Now just last week we saw lots of headlines in courts from the DWP heralding the milestone of 1 million employers complying with the automatic enrolment rules. And through this compliance, we've enrolled over 9 million workers into workplaces pension schemes. We've also seen low opt-out rates of 9%, which is far less than we predicted for 2012. 

    So there's no doubt that this policy has been a major success in kick-starting retirement saving for so many individuals around the country. However, in many ways this initial staging process for employers is the first step in a longer journey. For instance, we see from the declarations of compliance reports that over 8 million workers were not enrolled due to not meeting the eligibility rules, and of course many people are saving on minimum contributions that for many won't achieve an adequate replacement income in retirement. 

    Now these areas of wider coverage and contribution levels are widely debated in the industry. And today's call will touch on these areas when the guys look at the automatic enrolment review and the forthcoming auto enrolment step-up in contribution levels. As advisors who are active in this market, you'll appreciate that for employers auto enrolment is not something that is one and done. There is a need to continuously comply and ensure that ongoing duties are met and to avoid attracting the attention of the regulator who has shown over the past five years that they will use their enforcement powers if required. The role of professional advisors in supporting their clients with this ongoing compliance continues to be really important in my view. And Chris and Tom will look at a few key technical areas associated with the ongoing running of auto-enrolment schemes, cyclical re-enrolments, and how auto enrolment interacts with the annual allowance and money purchase annual allowance.

    A recording of this call will be available on our advisor extranet afterwards, should you wish to listen again or share with colleagues. And CPD certificates will also be issued. The presentation lasts around 30 minutes and you can ask questions as we go through using the Q&A functionality on the website. There won't be any calls at the end, but the guys will answer any questions you pose at the end as well. 

    So let's get into the detail. I hope you enjoy the call, over to Tom and Chris.

    Chris Jones: Thanks, Alex. Good morning, everyone. So of course now we've reached all the staging dates and most employers are complying with their automatic enrolment duties. However, as workplace pensions evolve, there are many other challenges that employers and workers must deal with. So today we're going to look at the recent AE review and the proposals in that, then look at the more pressing issue of phasing in and the step-up of premiums. We'll then move on to the annual allowance and AE interaction, i.e. the tapered annual allowance and the money purchase annual allowance, take a look at the different challenges posed by re-enrolment, and then end with a quick look at net pay and relief at source schemes. 

    So the automatic enrolment review, maintaining the momentum; the review considers how to build on the successes of automatic enrolment. Proposals include the duties will continue to apply to all employers regardless of the sector or size of the company. There will no exclusions. The government wants pension savings to be the norm from when most people start work. It wants people from 18 to benefit from automatic enrolment with the ambition to lower the age criteria from 22. However, this isn't planned until the mid-2020s. 

    They are proposing to change the way contributions are calculated, removing the lower earnings limit, currently £5,876. Of course, this will only affect those using the QE basis. Many employers already do this using one of the certification bases. 

    There will be a consultation to explore the cost to employers and a full impact assessment of the increased cost for businesses. The plan is for the £10,000 enrolment trigger to remain, but this will be subject to an annual review, however, we'll stay at £10,000 again for next tax year, 2018/2019.

    Regarding the self-employed, they will look at options to increase savings among self-employed people and may provide information about possible trials later this year. And they'll consider ways of fostering a sense of greater personal ownership of workplace savings. The government wants individuals to engage more with their retirement savings so they can plan adequately for the future. 

    Most of these proposals are for a few years' time, not until the 2020s. The more pressing issue is phasing in of premiums or step-ups. The minimum contributions increase for the first in April, currently just 2%; 1% employer, 1% employee of qualifying earnings between £5,876 and £45,000. So we have both a basic graph here on the left and the table on the right that shows the significance of the increase, with some employees' contributions increasing from just 1% currently to 5% over the space of just a year. So many more employees are likely to feel the impact of this than when they were first initially enrolled into the scheme. 

    Minimum contributions also apply to those under the certification basis. As a reminder, set one was pensions were paid at least equal to basic pay. Set two, pensionable pay at least equal to basic pay and at least 85% of the total earnings of the employees who are covered. And set 3 that's pensionable pay equal to total earnings. 

    From April, going up to 6, 5, and 5 in 2018, and then jump again to 9, 8, and 7. So as you go through the steps, more of the employees' earnings are covered. And because of this the minimum contributions are lower. Step two there is the same percentage contribution as QE.

    However, for most people, this will mean more contributions than using QE. Because of course it starts from zero pounds of earnings rather than £5,876. 

    So which employers are going to be affected by phasing in? So some employers, in fact, many employers continued with their existing scheme at staging date. And they would have already had contributions way above that 2% minimum. And that may have continued. They may have automatically enrolled people on that higher basis, many will often be leaving certification with the minimum contributions already at that level. So if they meet any of those levels, on any of those bases, they won't need to do anything in April. However, if not, contributions must increase to 6% or 5%, but of course can be a higher amount. 

    Increase may also apply to some employees or employers of individual employees that use an entitlement check rather than one of the certification bases. So they also need to check to make sure that their contributions under that basis are at least as good as that under the higher levels under qualifying earnings. 

    So which schemes are affected? It's all qualifying schemes, so not just automatic enrolment schemes, but any scheme, any contractual scheme that has been made into a qualifying scheme needs to increase their premiums in line with those minimums. 

    Is an employer consultation required? Well, not if the increase is just to comply with the legislative requirement, the legislative minimum, or is contained in the scheme rules. So increases for 2018 minimums don't normally trigger a consultation. And that would apply to qualifying schemes using QE and certified schemes. 

    Outside of this, a 60-day consultation is required for certain employers, i.e. those with more than 50 employees. For example, if an employer chose to increase contributions to the 8% this year to save having to do it in two steps, a consultation would be required unless it was already included in the scheme rules. 

    Pay reference period, so a lot of people’s pay reference periods are not aligned with the tax month or the tax year; and so will straddle the 6th of April. This can mean that in theory there should be a split payment with a two percent minimum applying before the 6th of April and where the 5% minimum applies from the 6th of April. This tax month runs from the 6th of April '18, to the 30th of May, '18; whereas many people will run a pay reference period in line with the month, for example, the 1st of April, '18 to the 30th of April, '18. From the 1st to the 5th of April, 2% minimum would apply and then from the 6th of April, a 5% minimum would apply.

    So whether that contribution needs to be pro-rated will depend on the scheme rules or the scheme processes. Some may calculate it based on-- or many will calculate based on earnings over the period and won't pro rata their contribution. And typically where the pay date is post the 6th of April and in most cases it will be towards the end of April when on a monthly basis. So in the example here it is the 25th of April it is possible to just apply the 5% for the full pay reference period. You need to check with the particular scheme how they will deal with that.

    The potential challenges of phasing in, and the big one of course is workers who don't want to increase their contributions. Now the key point is that the employers should not promote this as an option, should not offer this to employees in advance of April 6th. Ideally they will go through the process, increase the employees' contributions, increase their own employer contributions, and then deal with any objections post April, once the contributions have gone through. Then subject to the scheme rules and also the employer allowing it, they could technically remain in that scheme and reduce their contributions back down to a lower level or some other level below the minimum, as I say, with the employer's agreement. The employer doesn't have to allow that. 

    If they do so, that scheme becomes non-qualifying for that member. Importantly, it doesn't affect the qualifying status of the scheme as a whole or for the rest of the members, just that individual member. They then fall back into the assessment pool and would need to be re-enrolled at the re-enrolment date.

    Certification, another possible challenge; if the certification period runs beyond April 16 and they have not already included the premium increases, you need to close the certification period and recertify. Now the standard template did already allow for these increases to happen. So most cases it should be okay, but worth just reviewing just to make sure. 

    Salary sacrifice arrangements are another potential challenge. The agreements here need to be checked to ensure they've factored in these phased increases in advance. They might just be on a fixed amount basis, in which case you need to review them and amend those agreements. But it's possible to have written them in advance with the increases already factored in.

    The regulations refer to the rules and guidance and scheme rules. Many people use GPPs to do this, which won't have specific rules covering a particular employer in terms of the contributions that are paid. The place to look for the contractual relationship or the agreement will be the agreement between the employer and the provider and the employee and the provider. There should be agreements in place as part of the scheme, which would say that contributions will increase in line with those minimums. 

    A final point is employers could consider using contractual enrolment as a way of dealing with phasing in. And all this basically means they could just set their own terms as long as they're above the minimum, rather than waiting to be told when these contributions have to increase, could just enrol people contractually and put them straight on at least the minimums, using one on the certification basis, or on a QE basis. The downside of course is this may be more expensive. But it will save having to go through the process twice. 

    That's all from me. I'm going to pass it over to Tom, who's going to look at annual allowances. 

    Thomas Coughlan: Thank you, Chris. Good morning, everyone. So Chris mentioned the certification options. So under those options, we do have a potentially slightly problematic interaction that the minimum contribution that those options require can be more than the annual allowance. So in extreme cases it could be more than the GBP 40,000 standard annual allowance, though that's unlikely. What's much more likely is that minimum contribution is more than the tapered annual allowance, which can be as low as GBP 10,000 or the GBP 4,000 money purchase annual allowance. 

    So for example, an employer who operates their scheme on a Set 1 basis, from 2019, the minimum contribution there would be 9% of basic pay. So if you have higher earner paid GBP 250,000, then the minimum contribution under auto enrolment for that individual would be GBP 22,500. However, because their earnings are so high, their tapered annual allowance would be GBP 10,000. So that leads to a tax charge, as the minimum contribution as I said, GBP 22,500, and because of the minimum tapered annual allowance that leads to annual allowance excess for that individual of GBP 12,500. And being a top-rate tax payer, that gives a 45% tax charge of GBP 5,625 and that charge has to be met by the member by self-assessment in that instance. It is unlikely that scheme pays, whether the charge can be deducted from the fund will be available.

    So what can possibly be done about this issue? I think before looking at ways of dealing with it, there's a number of factors that have to be taken into account. So the first is, as we said on the last slide, the employee does pay the annual allowance charge, not the employer, as it is very much a personal tax issue. So then the final decision should be with the employee rather than the employer. Also for employers who do try to deal with that issue themselves, that can be slightly problematic as they won't necessarily know which of their employees is affected by the money purchase annual allowance, nor will they know who is affected by the tapered annual allowance or at least to what extent. And also just compounding that issue with the tapered annual allowance is that some employees themselves won't know until the end of the tax year exactly how much their annual allowance is tapered down to. 

    Those individuals that do wish to reduce their contribution, and so the question is, can they actually negotiate a different benefit package. So public sector employees, for example are often either in the scheme or they're out of the scheme and they're not accruing any benefits at all. So some individuals don't always have the ability to renegotiate that package. Also, a pension contribution that leads to a tax charge is always going to be better than no benefit at all. Because that tax charge will always be a fraction of the total benefit received.

    So I think the first step is to make a tax comparison, so you look at the effect of the contribution and the tax charge that that leads to, and then put that side by side with another alternative option perhaps, converting some of the contribution to salary. So on the left-hand side, a high earner, well above the tapered allowance threshold receives an employee contribution of GBP 40,000. Being a 45% tax payer, the annual allowance charge will be GBP 13,500 and if that was deducted from the fund that would leave GBP 26,500 for that individual. Just include the potential tax on that pension contribution, because obviously you have to pay tax to get those funds out of the pension. So that is a provision for the future tax that would fall due. And that leaves out of that original GBP 40,000, a net benefit of around about GBP 18,500. So that's just comparing that to an alternative option which is capping the contribution at GBP 10,000 and then paying the rest out of salary. 

    And the salary is not GBP 30,000. To keep the cost to the employer the same, I've deducted the employer national insurance. So the salary is at GBP 26,362 and then I've just included all the taxes that would fall due. So the tax and NI on the salary, and the potential tax on the pension, and that leaves a net benefit of around GBP 21,000. So it is better. However, it's not massively better and under the pension of course you have the tax-free growth in the fund, and perhaps other peripheral benefits that go with membership in the scheme as well. So in that instance, the employee would probably want to convert to extra salary. However, some employees might be happy just to continue to receive the benefit. But I think it's always worth doing this exercise first. Because whatever you convert the pension contribution to, to avoid the annual allowance charge, will itself be taxed.

    So do employers themselves need to do anything in this regard? And I think the first thing to say is that, a one-size-fits-all solution may not work, particularly for the tapered annual allowance. Hopefully the following table explains why. 

    So let's say an employer decides on a very simple strategy of just highlighting everyone who earns above GBP 150,000 and then caps their contributions at GBP 10,000. So take client A with the salary of GBP 155,000. They are above that threshold, but they're only just above it. So consequently their annual allowance has only been tapered down to GBP 37,500, so capping contributions at GBP 10,000 on this individual will probably be too extreme, because they've got plenty of allowance to pay contributions above that. Also client B earning GBP 210,000, they are tapered all the way down to GBP 10,000. However, they've already maximized their annual allowance elsewhere. So the employer then paying that extra GBP 10,000 does lead to an annual allowance charge which is the thing that they were trying to avoid. And then client C, whose salary with the employer is below GBP 150,000. They don't take any action at all, however, that individual might have other income that the employer isn't aware about that does give them a tapered annual allowance issue. So they potentially missed out on dealing with a potential issue for that client. 

    So how can they deal with this issue? Well, there's a few different options. So one is to look at carry forward. Now that will only apply to the tapered annual allowance, because the money purchase annual allowance can't be enhanced by carryforward. But for the tapered annual allowance you can use carryforward for a few years, depending on what is available. And that might be enough to cover excess contributions in the short term, and then only when that is exhausted do you then look at other options, perhaps. 

    Some employees might be happy to just receive the pension contribution and pay the tax charge. So the doing-nothing option will be quite an appealing option to some clients. They will be happy to do that. And again, some final salary members will be used to paying an annual allowance charge based on high rates of accrual within the scheme. And they're happy to do that just to continue receiving the pension contribution that they get. 

    For those that do wish to reduce the contributions, then the employer should look at switching to an entitlement check where the employer just checks that the monetary amount of the contributions are at least equal to what you would get under QE, or of course the employer could switch the individual to QE. In this instance, the contributions will ultimately be reduced. So it's important that the employer looks to offer some replacement benefits, so perhaps some extra salary or bonus, as we showed on the previous slide.

    But the best way to do it is for employers to discuss the options with their employees and let them decide what the best approach is. Because they won't know to what extent each individual is affected by this issue. So discussing each option is the way to go. 

    In terms of fixing contributions to avoid an annual allowance charge, fixing at GBP 4,000 for the money purchase annual allowance will enable that. However, with the tapered annual allowance, it's important that contributions aren't just capped at GBP 10,000, but they're capped at whatever the client's tapered annual allowance is for the year, plus their 2014-15 carryforward. Because if that is not maximized before the 6th of April this year, then that carry forward is lost. And that may involve some estimating as to what the tapered annual allowance is this year. But it's important that previous allowances aren't foregone.

    Moving on to re-enrolment. So there are two forms of re-enrolment. So there is immediate re-enrolment or cyclical re-enrolment. However, we're usually referring to the latter of those two, which is the three yearly re-enrolment cycle. Immediate re-enrolment is a corrective position where the employer has to put members back in a qualifying scheme if they were taken out of that scheme, other than through their own choice. As I said, for example, an employer decides to close their scheme to set up a new one on better terms, then they have a duty to put all their members back in a qualifying scheme from the following day. 

    Cyclical re-enrolment is the three yearly re-enrolment cycle and that covers those who have opted out or left the scheme and they have to be reassessed and then re-enrolled if they're eligible. The three yearly re-enrolment cycle is linked to the staging dates and not the deferral dates if they used postponement, so this is three years on from the staging date. And there's a little bit of flexibility to decide what is the best re-enrolment date for that. And also the declaration of compliance has to be completed after three yearly re-enrolment. So this is just to allow the employee to tell their TPR exactly how they've met their duties, just as they did when they did automatic enrolment. 

    So, essentially the process of automatic enrolment is repeated at three-year intervals. But there are some key differences between re-enrolment and automatic enrolment. So first of all, re-enrolment only applies to those who had an automatic enrolment date with the employer, so someone who has always been an eligible job holder, and has never had an automatic enrolment date, then they will be automatically enrolled when they become eligible rather than re-enrolled. And also postponement cannot be used with re-enrolments. So when the re-enrolment date is selected, the membership of the scheme has to start from that date onwards.

    So that means there are two assessment pools for the employer to deal with:  the ongoing automatic enrolment period where the first pay reference period that the individual is eligible, which may be after the postponement, new workers, and workers who have not been enrolled must be put into the scheme. And then it's every three years there will be the cyclical re-enrolment assessment pool, no postponement, but opt-out and scheme leavers have to be assessed and then re-enrolled if they are eligible. But once the employer has highlighted who needs to be automatically enrolled or re-enrolled, the process of achieving active membership of the scheme is unchanged. 

    So employers should be preparing for re-enrolment. One of the key things they have to do is to select the re-enrolment date. As I said, there is some flexibility here. So they have three months either side of the third anniversary of the staging date. And they can select any dates within that period. So that can allow them to select the most convenient date, so perhaps to align with tax weeks or pay reference periods. And they can therefore ensure that they don't have any part period payments. Some employers will operate tax weeks and tax months, side by side. And what they can do is look within that six-month period and find a date which is the start of a tax week as well as the start of a tax month. So even employers who run separate periods side by side can still use that flexibility to choose the most suitable date.

    And that applies at employer level once it has been selected. That will apply to all affected employees. They can't segment or stagger re-enrolment. That single date applies to all of their workers. And that re-enrolment date starts the six-week period within which membership to the scheme has to be achieved and contributions will start from that date onward. So this will often involve backdating to the re-enrolment date when calculating contributions. 

    There's been some recent changes to automatic enrolments, recent leavers and opt-outs, those in the previous 12 months, they can be excluded from re-enrolment. This is optional for the employer. And also those with lifetime allowance protection, they can also be left out as well, again, that is optional and the employee has to provide some evidence to the employer. So they need a certificate or a reference number to show that they have that protection and it would be disadvantageous for them to be joined into the scheme. 

    The payment agreements as well: re-enrolment is a good time to check that all these payment agreements are up to date. If they're not up to date, then the scheme won't be qualifying and then the re-enrolment will not be effective. So the three yearly cycles, that is a good time to check that all the paperwork and documentation, et cetera, is up to date. And as with phasing in contractual enrolment can allow the employer to select their own re-enrolment schedule, so they could do perhaps 12 monthly contractual re-enrolment. And then when they get to their automatic re-enrolment dates, then everyone has already been joined back into the scheme and no one has anything left to do. So a lot of employers will prefer that route to sticking to the statutory schedule. 

    Okay, that's re-enrolment. Just one final point to cover and this is net pay versus release at source. So net pay schemes don't generate 20% tax relief for very low earners, so those who earn below the personal allowance of GBP 11,500. They will not get tax relief on their contributions and this is just a complexity with the tax relief system. However, if they run a relief at source scheme, they would get 20% tax relief. So there is this disparity between the two different types of schemes. So employers need to think about this and perhaps set up the most suitable scheme, depending on the workforce profile.

    Often if there is a net pay scheme, then the individual has little choice, because of the linked employer contributions will only be available in that scheme. So this is a bit of an issue at the moment. The government has acknowledged it. But at the moment there's no resolution of this issue in sight. But we'll keep an eye out for that and we'll report when we hear anything. 

    That is all the technical content for today. Chris is just going to take you through some of our resources now. 

    Chris Jones: Thanks, Tom. Yeah, so we'll just have a quick look at other support material we can offer you and then we'll get to some of your questions. So there we have the January edition of Tech Talk up on the slide, which has articles on the reduction in the dividend allowance and the impact of that. And it will look at the lifetime allowance increase, some tax year-end pension planning, an article on the tapered annual allowance, and the money purchase annual allowance generally, and a look at the difference between ISA and pensions and the lifetime ISA.

    Just released today will be the next edition, which will be a corporate-focused edition. And this will include lots of articles on the content we have covered here and add some more detail on that. Tom will have an article on the subject he talked about earlier, automatic enrolment and the interaction with the money purchase annual allowance and the tapered annual allowance. Alex has an article looking at step-ups. I'll have an article on net pay and relief at source. 

    We also have articles on the automatic enrolment review I covered at the start, TUPE transfers, and the ever-popular question to our help desk, pensions and paternity pay. So look out for that one.  It is available on our website from now. 

    We also have other support material. On the left is our tools section which is particularly useful coming up to the tax year-end, carryforward calculator, checking to maximize contributions for any carry forward relief for '14-15. We also have a tapered annual allowance calculator and salary, dividend, and pension calculator.

    All our articles there are on the website as well. And of course all of the master classes, including this one, are placed on the advisor side of our website for you to watch again. The slides, recording, and transcripts will be there. And this one should be put up by the end of this week. 

    So we'll now have a look at any of the questions, if you'd like to type them into the webcast, we'll try and cover them. 

    Thomas Coughlan: Yeah, okay. There's a few questions that have come through. There's a question here. So are they proposing to retain the top-level criteria currently GBP 45,000? 

    Chris Jones: Yes, so under QE that will retain. It's going up to £46,350 from next year. But yes, that still retains. Obviously if you're using one of the certification basis, there's no top there. But they haven't proposed removing it for QE basis. 

    Thomas Coughlan: Okay, another question here regarding phasing in of contributions, one for you, perhaps. What is the obligation on an employer with regard to contributions if a member wishes to pay less than the minimums, i.e., stay on 1% from April?

    Chris Jones: Yes, so there's no legislative requirement for the employer to continue paying. Obviously they can choose to pay. But they don't have to. So basically they can offer the automatic terms at the minimum, or can be above the minimum. It couldn't be ridiculous levels because then you're getting into inducement, but any sensible level. If the employee doesn't want to accept that offer, then there's no obligation for the employer to pay. But of course, many will choose to continue to pay. 

    Thomas Coughlan: Okay, there's a question here regarding salary sacrifice agreements. If existing salary sacrifice agreements don't mention a phased increase, does this mean that new salary sacrifice agreements needs to be drafted and signed by each employee?

    Chris Jones: Yeah, I mean it depends on the process that's been put in. So many people introduce their exchange without having a signed agreement and use a negative basis. So it's really the legal setup and how that's precisely being done. But if there's no legal ability to take more money from that employee via salary sacrifice, then those agreements will need to be looked at. 

    Thomas Coughlan: Yeah, a couple of non-technical questions here, so will our CPD certificates be sent? Yes. They will be sent to attendees afterwards. And will this be available to viewers later today? Yeah, the recording of this session will be placed on the website as well. 

    Chris Jones: And there's one here. With carryforward, must there be relevant earnings in the '17-18 tax year sufficient to cover the contribution or is the net relevant earnings in the former three individual tax years be used? That's a common question we get. 

    Thomas Coughlan: Yeah. So if someone is paying personal contributions this tax year using carry forward, then they have to have the full earnings to cover that contribution in this tax year. So what you are carrying forward is the unused annual allowance from previous years. But for tax purposes you are assessed on the personal contribution in this year. So say for example someone wanted to pay GBP 160,000, this tax year there is a personal contribution that would be this year's annual allowance and the previous three, they would have to have earnings of GBP 160,000 in this tax year to be able to do that. 

    Yeah, there's a re-enrolment question here. If the re-enrolment date is the 1st of April 2018, can an employer choose 1st of July, 2018 as their new re-enrolment date? 

    No. In that instance they are restricted. The maximum date they can go up to is the 30th of June, 2018. So that six-month window would start on the 1st of January, 2018. They would go up to the 30th of June. So yes, so unfortunately if they wanted to start on the 1st of the month, then the maximum they could go to would be the 1st of June, 2018 rather than 1st of July.

    Chris Jones: So a controversial one, but I'll take it. Is consultation required to bring forward increases to the 1st of April, so there are no pro-rata payments, e.g. the pay reference period is the 1st of April to the 30th of April. 

    Yeah, so all the TPR guidance we've seen suggests it's just depends on the process available from the provider and how they process that payment and the agreements in place. So normally for example, us, we'll have agreements in place to increase contributions in line with the minimum. In addition to that we don't pro-rata premiums. So the only way to meet that increase is to do it from the 1st. So our view in that situation is that consultation would not be required, because that is the provider's process. But I'm just going to caveat that when somebody has recently phoned just the basic TPR help line and they suggested that they did need to consult. But that could just be putting it in a letter to the employees. 

    I can't see anything in the regulations that requires the employer to consult. And listening to TPR technical experts, they seem very relaxed about it and just refer to the provider's processes.

    Thomas Coughlan: Yeah, there's one more question before we hand back to Alex. Just a request for a summary of the entitlement checks. So the entitlement check is just looking at what would be payable under QE. So QE is from April it's 5% with earnings between GBP 5,876 and GBP 45,000. And that's works out at around about GBP 2,000. The entitlement check is paying a level of contribution for an individual and just doing a check that that contribution is at least equal to what they would have got if that individual was on the QE basis. So the entitlement check is just a way of ensuring that you're at least meeting the statutory minimum, but you haven't set your scheme up on that basis or any of the certification basis either. But we have a number of articles on our website that summarize how that works. 

    Any questions that we haven't answered, we'll come back to you separately by email. We will hand back Alex now for closing comments. 

    Alex McCallum: Thank you, both. So thanks to Chris and Tom for what I thought was an excellent session. And thank you to everyone dialling in for submitting some fantastic questions as well, which the guys have answered brilliantly there. So just some closing comments from me, again, auto enrolment is here to stay, as I touched on at the start. Every employer now has a workplace pension scheme and more people are participating in retirement schemes than ever before. And as the guys touched on, the government are committed to this policy and they're looking to improve and extend its reach over the coming years. 

    In my view, the role of advisors continues to be crucial to the ongoing success of auto enrolment and supporting clients with ongoing compliance, engaging and advising workers, and in supporting the governance of schemes for employers. Here at Scottish Widows, we're committed to supporting you and your corporate customers with the provision and promotion of workplace pension schemes. 

    So please make use of the material available from the financial planning team which Chris highlighted, and speak to your Scottish Widow contact about how our proposition can help with the planning ideas Chris and Tom have covered today. You can also follow us on LinkedIn and Twitter where we share a lot about our technical updates and a more generic proposition updates. And as a reminder, a recording of today's session will be placed on the advisor Extranet for further review and all Scottish Widows historic master classes are on there as well, should you want to look at those.

    CPD certificates will be issued. And finally just thanks again to Chris and Tom for taking us through this presentation today. Thanks again for joining. And that concludes today's presentation. Thanks again. 


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