My Ref: MRP 23/8
25th November 2013
Circular Num: NP/ 329 /13
To: The Secretary
Regional Councils, All Shipping Branches
FORELAND SHIPPING (GUERNSEY) LIMITED – AUTO ENROLMENT
In line with Government legislation in the form of the Pensions Act 2008, all employers are responsible for automatically enrolling employees who are not currently saving for their retirement into a workplace pension arrangement.
For an employee to be an Eligible Employee, and therefore to be auto enrolled, the following criteria must be met:
· Are not already in a qualifying workplace pension scheme
· Are at least 22 years old
· Are below state pension age
· Earn more than £9,440 a year
· Work or ordinarily work in the UK (under their contract
It is also mandatory for employers to contribute to an employee’s future retirement provision and in the case of Defined Contribution schemes the following phased minimum contribution rates will apply:
Phasing Period Minimum % of qualifying earnings
Employer Minimum Contribution
1st October 2012 to
1st October 2017 to
1st October 2018
Foreland Shipping (Guernsey) have been given a staging date of 1st April 2014 when they will have to Auto Enrol Eligible Employees into a qualifying pension arrangement.
Those Eligible Employees will be auto enrolled into the Foreland Shipping ‘Default’ company pension scheme which offers bare minimum contributions as highlighted above.
However, Eligible Employee will have the option to switch to either the Merchant Navy Ratings Group Personal Pension Plan (MNRGPP) or the Merchant Navy Officers Pension Plan (MNOPP). Individual also have the option to opt out of auto enrolment. All three funds, the Default, MNRGPP and MNOPP, are Defined Contribution (DC) pension schemes.
DC retirement benefits are based on the amount of money which put into an individuals pension pot during a members working life (pensionable service), how well this money is invested and the Annuity (pension) rates at retirement. It is therefore crucial that the level of money is as high as possible i.e. employer and member contribution.
The contribution rates for the MNRGPP and MNOPP are:
· MNRGPP member 3.9% / employer 4.0%
· MNOPP member 3.9% / employer 5.1%
Foreland management wrote to Eligible Employees on 28th October 2013 informing them that they would be auto enrolled into the company default pension scheme from 1st April 2014 and receive minimum employer contributions. However, individuals have the choice to join the MNRGPP or MNOPP before the 1st April 2014.
It was requested that if members wished to join either of the two schemes prior to 1st April 2014 they should complete the attached forms by 31st December 2013. The attached form is contained within the letter of 28th October 2013. However, individuals would still have the choice to join the MNRGPP or the MNOPP before 1st April 2014.
At the time of writing I am informed that only a tenth of those Eligible Employees have responded to the letter of 28th October 2013 which means that unless individuals complete the attached form mentioned they will be auto enrolled into a bare minimum default pension arrangement.
While the member contribution rates in the MNRGPP and MNOPP are higher than that of the default scheme, the employer’s contribution is significantly higher as well. This means that a greater amount of money is being built up in a member’s pension pot as result of the members and employer contributions being higher.
While there are no promises to the exact level of pension at retirement individuals need to seriously consider switching to the MNRGPP or the MNOPP as a result superior benefits being offered in these two schemes.
Please note if individuals do nothing they will be auto enrolled into the default pension scheme from 1st April 2014.
I have written to Foreland Shipping members informing them of this important information.
I will keep you informed of developments