My Ref: MRP 4/17 4th September 2013
Circular Num: NP/231 /13
To: The Secretary All Branches & Regional Councils
STAGECOACH UK BUS - AUTO ENROLMENT
As many of you will be aware the Government introduced Pension legislation in 2008 which placed an obligation on employers to automatically enrol employees who are not already saving for their retirement into a workplace pension scheme.
This legislation became active on the 1st October 2012 with the largest of employers being the first to auto enrol ‘eligible’ Jobholders into a ‘qualifying’ workplace pension scheme. Along with the responsibility employers will also be compelled to make pension contributions.
Stagecoach UK Bus management have recently been consulting with union representatives and pension committee members regarding their Auto Enrolment (AE) intentions. Please find below a brief summary of the AE obligation being placed on employers and an outline of the Stagecoach proposals.
For a worker to be ‘eligible’ to be automatically enrolled into a pension scheme the following criteria must be met:
· Are not already in a qualifying workplace pension scheme
· Are aged between 22 and state pension age
· Earn more than £9,440 a year
· Work or ordinarily work in the UK (under their contract)
Each employer will have been given a ‘staging date’ to begin auto enrolling employees. Depending on the size of the employers PAYE scheme, employers will have to start to auto enrol between the 1st October 2012 and 1st February 2018. Legislation allows employers to postpone AE up to 3 months. Thereafter employers will be obligated to carryout auto enrolling those Eligible Jobholders every three years.
Stagecoach UK Bus has 34 entities and was given staging dates ranging from 1st August 2013 to the 1st July 2017. However, it is proposed to have a universal staging date of 28th October 2013.
In line with this legislation Stagecoach management have identified four categories of employees who have recently been sent customised letters depending on their circumstances as illustrated below:
1. No Action Required. Those already members of the Stagecoach Group (Routes 1, 2, 3 members) and Local Government Defined Benefit Pension Schemes.
2. No Action Required. Those already members of the Defined Contribution Stagecoach Pension & Investment Plan (The Hargreaves Lansdown Plan) and the Standard Life Stakeholder Plan.
3. Action Required. Those members in the Stagecoach Group Pension Scheme “Low Cost Route” will be automatically switched to Route 1 but will have the choice to move back to the Low Cost Route. This is because the Low Cost Route does not meet AE qualifying requirements.
It is therefore important that these members note that they will have a one month window to decide whether to stay in the Stagecoach Group Pension Scheme Route 1, and pay increased contributions of 7.4%, or move back to the Low Cost Route (4.9%).
4. Action Required. Those employees not already contributing into a pension scheme (Eligible Jobholders) will be AE from 28th October 2013.
New eligible Jobholders employed after 1st October 2013 will be AE on completion of 3 months service or before if requested.
Stagecoach management have also sent a letter to those employees non-eligible to be AE i.e. under the age of 22 or between state pension age and age 75, or earning less than £9,440. However, these employees may be allowed to “opt-in” and benefit from minimum employer contributions if they started their employment before 1st October 2013.
Those Eligible Jobholders will be AE into the Stagecoach Retirement Savings Plan which is a scheme administered by Standard Life. The plan will have minimum contribution rates in line with legislation:
Phasing Period Minimum % of qualifying earnings
Employer Minimum Contribution
From staging date to
1st October 2017 to
1st October 2018
These contributions are based on qualifying earnings between £5,668 and £41,250 (2013-14).
Depending on an individual’s circumstances they may be able to increase their contributions and the employer may match any extra contributions made into their pension pot.
While Eligible Jobholders can cease being a member of the Stagecoach Retirement Savings Plan at any time, those members wishing for their membership to be completely unwound should opt-out within the first 30 days of being AE.
However, I would advice any member considering opting out of a pension scheme to seek Independent Financial Advice before doing so. While the RMT are unable to provide such advice, information can be found at www.unbiased.co.uk.
Stagecoach management will be writing again to employees towards the end of October 2013.
I will keep you informed of future developments.