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EPN405 - Automatic enrolment and PCSPS eligibility

Audience:

This notice will be of interest to:

  • HR Managers;

Action:

To:

  • Note suggested pension arrangements for staff members who are considered to be within scope of automatic enrolment but not eligible to participate in the Civil Service pension scheme.

Timing: 

Routine

Background

  1. The Civil Service Pension scheme has rules regarding which individuals are eligible to participate within the scheme. Eligibility is limited to:

    a. Civil Service employees
    b. Employees of employers listed on Schedule 1 of Superannuation 1972 Act
    c. Fixed-term appointments
    d. Staff eligible for Fair Deal protection
  2. Employers determine which staff are within scope of automatic enrolment. If an employer determines a member of staff is within scope of automatic enrolment but that member of staff is not eligible to participate in the Civil Service Pension scheme, separate pension provision has to be arranged by the employer for affected individuals/groups. Further detail about automatic enrolment requirements can be found at http://www.thepensionsregulator.gov.uk/automatic-enrolment.aspx
  3. Type of individuals/groups of staff affected
    It is likely that employers will have low numbers of potentially affected staff – typically up to about 10, and some employers may not have any at all. The type of staff likely to be affected includes fee earners, self-employed with employee characteristics, public appointees and Chairpersons of Boards.
  4. Detail of suggested approach
    Cabinet Office has been asked to suggest a default option employers can follow for staff eligible for automatic enrolment but ineligible for the Principal Civil Service Pension Scheme. Employers are free to disregard this if they prefer alternative arrangements.
  5. The suggested default option is:

    -  Use NEST as the pension provider
    -  Set employer pension contributions at 3%
    -  Set member contributions at 5% (including income tax relief)
    -  Apply the banded earnings used within the automatic enrolment statutory minimum thresholds to calculate qualifying earnings (rather than having all income from £0 of income as pensionable)
  6. Cabinet Office has sought procurement advice around Departmental responsibilities. Due to the low value of contracts, there is no requirement for Departments to involve procurement lawyers or procurement specialists prior to contracting with NEST to provide a pension for relevant staff. However, if large numbers of staff are involved (100+) then Departments should seek advice.
  7. Employers wishing to adopt this default approach should make arrangements with NEST directly. Further information about how to set up a NEST pension can be found at http://www.nestpensions.org.uk/schemeweb/NestWeb/public/NESTforEmployers/contents/nest-for-employers.html.
  8. Any employer is free to change any or all of the above characteristics (subject to meeting automatic enrolment requirements), including disregarding the recommendation entirely.

Contact

If you have a question about the distribution of EPNs or you need to receive them in a different format contact employerpensionnotice@cabinet-office.gsi.gov.uk.

You can find electronic copies of the Employer Pension Guide, all current EPNs and forms on our website.

This notice is for employers and should not be issued to scheme members.

If members have a question about their pension they can find information on this website or by contacting your Pension Service Centre.