This section aims to answer the more frequently asked questions about pension reform implementation at Lancaster University. Individual circumstances can have an impact on how it will affect you and your options. Saving for retirement is an important financial commitment and the options available will depend on your individual circumstances. You can gain further advice on pension auto-enrolment at Lancaster University and how it might affect you from Payroll & Pensions.
- What is pension auto-enrolment?
- Benefits of a workplace pension
- Does it affect me?
- Joining a workplace pension scheme
- Opting out of a workplace pension
- Further information
What is pension auto-enrolment?
The Pensions Act 2008 aims to make it easier for people to save for their retirement. It requires all employers to enrol their workers into a qualifying workplace pension scheme if they are not already in one. Employers are also required to make a contribution to worker’s pensions through this scheme.back to top
Why is pension auto-enrolment being introduced?
People are living longer and are likely to enjoy a longer retirement. However many people are not saving for their retirement at all, and many who are saving aren’t saving enough. These changes will give many more people the chance to save for when they retire. This is further explained on the workplace pensions web site at direct.gov.uk.back to top
When will auto-enrolment happen?
From 1st April 2013, every employee not currently enrolled on a workplace pension scheme will be assessed against a set of defined criteria: age, UK working and qualifying earnings. Eligible jobholders will be informed in advance and automatically enrolled. Other staff will be informed of their opportunity to join a workplace pension scheme.back to top
What is contractual enrolment?
The rules of the USS and Local Government Pension Schemes require the University to enrol employees into the pension scheme at the start of employment when certain contractual conditions are met. If your employment is for longer than 3 months and your hours and pay are guaranteed in the contract, then you will be contractually enrolled. If you opt out after contractual enrolment, you may - subject to your earnings level - be re-enrolled under the automatic enrolment rules (see Joining a workplace pension scheme). You can again opt out if you wish.back to top
What are the benefits of staying in a workplace pension?
A pension is a way of saving money to provide you with an income when you retire. There are many benefits to having a pension at work.
- Your employer will pay into it. This contribution from the University means your pension can build up more quickly than if you were saving for your retirement on your own.
- If you are a tax payer, you can get tax relief on your contributions and this means it reduces the real cost to you of your pension contribution.
- Your workplace pension belongs to you, even if you leave your employer in the future. Being in a workplace pension is an important step towards giving yourself the lifestyle you would like in later life.
Further general information on workplace pensions is available from direct.gov.ukback to top
What are Lancaster University’s Workplace Pension Schemes?
Lancaster University is extending access to its current workplace pension schemes:
- Local Government Pension Scheme this is available to staff on Grades 1 to 6, and is now extended to include casual employees on an equivalent pay rate.
- Universities Superannuation Scheme (USS) this is available to staff on Grades 7 and above, or now includes other staff employed by the University on an equivalent pay rate.
How much will pension enrolment cost me?
Your pension contribution will be deducted from your salary and shown on your payslip. The cost of your contribution will depend on the workplace scheme and your current earnings level. Current contribute rates are:
- Local Government Pension Scheme (LGPS)employee contributions are based on earnings bands and vary from 5.5% to 7.5%, and the University (employer) contribution from 1st April 2013 is 15.1 %.
- Universities Superannuation Scheme (USS)employee contribution rate is 6.5%, and the University (employer) contribution is 16%. Employee contribution rates for returning retirees are higher.
Further advice on contribution costs is available from Payroll & Pensionsback to top
Does pension reform affect all Lancaster University’s employees?
Yes. The Pension Act 2008 requires that the University provides a workplace pension for all staff between the ages of 16 and 74, and to automatically enrol individuals aged between 22 and state pension age that have earnings over the qualifying earnings threshold. Sessional and casual employees, including student employees, are included.back to top
I am already in one of the workplace pension schemes: do I need to do anything?
No, as long as you remain an active member of the workplace pension scheme.back to top
Why is the timely submission of timesheets important (casual employees)?
If you are required to submit timesheets, prompt submission ensures you are paid the appropriate amount each month. If you submit time sheets late, which cover more than one month, you will be paid for this work in a single aggregate amount. This may generate an earnings spike and activate auto-enrolment into a workplace pension scheme. Pension contributions will be automatically deducted from your pay at that point.back to top
What if I have retired and I choose to return to the University?
You can rejoin a workplace pension scheme but there may be certain changes in the terms and conditions set by that scheme. Returning retirees below the age of 74 come under the provisions of the Pension Act and may elect to join the workplace Pension scheme. Those returning retirees below the state retirement age who meet the eligible job holder criteria will be automatically enrolled. You should seek further advice from Payroll & Pensionsback to top
Can I opt into a workplace pension scheme?
Yes. If you have not been automatically enrolled on to a workplace pension scheme and are between the ages of 16 and 74, you can still opt to a join a workplace pension scheme. Further advice can be obtained from Payroll & Pensionsback to top
Can I choose which workplace pension scheme I join?
No. As previously stated, the workplace pension scheme offered will depend on your contract.
What is the assessment process for pension auto-enrolment?
If you are not a member of the workplace pension scheme, the University is required under the legislation to make an assessment against a set of criteria, and inform you in advance as to whether you will be automatically enrolled:
- An ‘eligible job holder’ must be aged 22 or over but no more than State Pension Age, and must have earnings over £9,440 pa at current rates (£786 per month). You will be automatically enrolled into a workplace pension scheme.
- Even if you do not meet the criteria to be an ‘eligible job holder’, you will meet the criteria to be a ‘non-eligible job holder’ if you are aged between 16 and 74 with earnings between £5,668 and £9,440 (£472 and £786 per month), or you earn over £9,440 but are aged between 16 and 21 or State pension Age and 74. You will have the option to enrol in a workplace pension scheme.
- If you do not fall into either of these categories, and you are aged between 16 and 74 with earnings below £5,668 (£472 per month), you will be an ‘entitled worker’ and will have the right to join a workplace pension scheme.
These qualifying earnings thresholds are effective from 6th April 2013 and will be reviewed by the Government periodically.back to top
If I am hourly paid, when would I be automatically enrolled?
If your earnings are over £9440 pa (£786 per month) and you meet the criteria as described above, you will be automatically enrolled into a workplace pension scheme. If you are hourly paid, the number of hours you are paid in a pay period will determine whether you meet this earnings threshold. The following table provides an illustration. Where you are required to submit a timesheet, it is important that these are submitted every month before the payroll deadline. The criteria for assessing for auto enrolment is based around the pay period (which will always be one month) and NOT for the period the work was done.
The following table provides an illustration. Where you are required to submit a timesheet, it is important that these are submitted timely. Does it affect me?
|Hourly Rate||Holiday Pay||Total Rate||Number of Hours||Monthly Earnings||Auto Enrolled?|
I hold more than one concurrent contract: which pension scheme can I join?
Where you hold more than one concurrent contract with the University, the level of your aggregated earnings will be a key determinant of whether you are automatically enrolled. The scheme or schemes offered to you will depend on your contracts. Further advice is available from Payroll & Pensionsback to top
What happens if I am auto-enrolled but in subsequent months my earnings fall?Once enrolled on a workplace pension scheme you are member of that scheme unless you choose to opt out. Note the benefits of active participation in a workplace pension scheme (see Benefits of a workplace pension). back to top
Can I opt out of the workplace pension scheme?
An opt-out notice cannot be submitted prior to becoming an active member of a workplace pension scheme. If following enrolment into a workplace scheme you decide you wish to opt-out, you will need to complete and submit to the Payroll & Pensions office a valid opt-out notice within three months of your enrolment. The opt-out notices are available to be downloaded on the pension scheme website. Please note, the Workplace Pensions Reform Act does not allow Lancaster University to provide you with an opt-out notice.
If your opt-out notice is valid, you will be refunded any contributions that you have made. However, after this opt-out period has expired, you will not be able to opt out but you can cease to be an active member. You will not receive a refund of contributions previously made but will retain a deferred pension benefit held in that scheme. Saving for retirement is an important decision about your potential future income and lifestyle (see Benefits of a Workplace Pension Scheme).back to top
If I choose to opt out of the scheme: can I re-join at a later date?
Yes. Further advice is available from Payroll & Pensionsback to top
If I opt out of the scheme, will I be automatically re-enrolled?
If you have been contractually enrolled and you subsequently choose to opt out of the workplace pension scheme, you will be re-enrolled under the provisions of the Pensions Act if you meet the statutory criteria (see Joining a workplace pension scheme). If you are an eligible jobholder (as defined by the Act), you are automatically enrolled under the provision of the this legislation only once in the three year period – either at the staging date (1st April 2013) or at the point you were assessed to be an eligible jobholder. If you opt out, the University is required to automatically re-enrol you on 1st April 2016 if you continue to meet the eligibility criteria.back to top
You can obtain further advice from Payroll & Pensionsback to top