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The Creative Pension TrustSecuring youremployees’ retirements- Employer guide

The Creative Pension Trust Employer Guide

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Creative Pension Trust An asset to your business and employees

Introduction

With auto enrolment legislation making pension provision compulsory for employers in the UK, more and more

employees will benefit from pension savings. In time, many of your employees will build up a sizeable Retirement

Savings Account to help fund their retirements.

Choosing the Creative Pension Trust will benefit your business as well as your employees.

The Creative Pension Trust will be an asset to your business because it can be your qualifying scheme to help

you fulfil your auto enrolment responsibilities, it is simple to run and it is a high quality workplace pension, with

investment management from Scottish Widows.

In 2015, more people associated Scottish Widows with being ‘a leading pension provider in the UK’ than any

other major Life, Pensions and Investment brand.*

*Source: Hall and Partners Brand Tracking Survey 2015. 4,144 interviews conducted among households (AB, C1, C2) responsible for household financial decisions.

The Creative Pension Trust is simple to understand

and operate, with the most appropriate options

for businesses staging in 2019 and beyond built in.

There are no decisions required in order for you

to run a compliant scheme and it works with your

existing payroll software.

Simple

The Creative Pension Trust will accept all

employers and their employees on the pension

scheme basis shown within this document.

Pre-accepted terms

Employees, once members of the Trust, have

access to information about their pensions at any

time through secure online accounts.

Online

The Creative Pension Trust can be your auto

enrolment pension as it meets the Qualifying

Workplace Pension Scheme criteria laid down by

law. For example, the scheme does not require

employee application forms or decisions in order

to join and it meets the minimum contribution

requirements.

Qualifying

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The Creative Pension Trust is a centralised Master Trust pension scheme, approved by HMRC and regulated by The Pensions Regulator (TPR). It is one of a relatively small number of schemes that have received Master Trust Assurance Framework Accreditation which is recognised as an important benchmark by TPR. The Trust is on the list of registered pension schemes published on their website.

It is subject to robust governance from a professional board of Trustees which includes PAN

What it is?A Master Trust Protecting benefits and keeping life simple

Governance LLP, one of the UK’s leading and award winning pension trustee companies.

The pension scheme benefits enormously through economies of scale. Many thousands of employers participate in it, benefiting from common management and administration procedures and the pooling of assets which significantly reduces pension management and investment costs. Consequently, the charges associated with the Trust are very low and as a result extremely competitive.

Employee contributions

Independent governance and oversight for peace of mind and security

Employer contributions

Member Retirement Savings Account

Employeecontributions

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Each time you pay your employees, they have to be assessed. When the payroll data is assessed each pay period,

every employee is assigned to one of three auto enrolment categories. The action required will depend on which

category each employee falls into which is outlined in the diagram below:

How it works

Entitled workers

Aged 16-74Earn less than £6,136

Right to join

Non-eligible jobholders

16-22 or SPA-74earn above £10,000

OR Aged 16-74

earning above £6,136but below £10,000

Right to opt in with employer contribution

Jobholders

Eligible jobholders

Aged 22 - SPAEarn above £10,000

Must be auto enrolled with employer contribution

Earnings figures shown are correct for the 2019/20 tax year.

Employees that must be enrolled into the Creative Pension Trust will have contributions deducted from their

salaries and then invested for them.

The contributions are made up of two elements – those payable directly by the employer and those collected

from payroll in respect of the employee’s own contributions.

Both elements are then payable together as one combined payment that is collected by direct debit from the

employer’s bank account.

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How much is payable

From April 2019

Employer 3.00%

Employee (gross) 5.00%

The pension contributions payable into the scheme

must meet the government’s minimum criteria

for auto enrolment purposes. The standard

contribution basis for all employers participating

in the Creative Pension Trust will be based on

each employee’s earnings between a lower and

upper threshold. This is known as the ‘Qualifying

Earnings’ basis.

It is the most cost effective way to meet the

statutory minimum criteria for most employers.

The Qualifying Earnings basis typically gives the

lowest cost because only those earnings between

a lower and upper limit are subject to pension

contributions.

This band of earnings for the 2019/20 tax year is

earnings between £6,136 and £50,000.

Example: An employee earns £20,000 pa. Instead

of basing pension contributions on this full amount,

you will only need to pay contributions on earnings

of £13,864.

The auto enrolment rules state employers and

employees must pay contributions on a rising

scale in line with a set phasing schedule of

minimum contribution rates set down by law. The

table below shows the percentage of Qualifying

Earnings that must be paid:

You or your employees can pay more than these minimum contributions if desired, however, by law

contributions cannot be less. All contributions payable will be collected by direct debit from the employer’s

bank account. Please call our helpdesk on 0345 606 0424 for further information.

• Contributions up to prescribed limits are an allowable business expense for corporation tax purposes and are not considered a benefit in kind for employees

• Where employees are tax payers, contributions up to prescribed limits qualify for tax relief at the employees highest marginal rate. This will be done automatically as their pension contribution will be deducted from their pay before tax is calculated

• Please note that if their earnings are below the starting rate for income tax, they will not benefit from the tax relief a tax payer would receive

• Up to 25% of an employee’s Retirement Savings Account can be taken from age 55 onwards as a tax free lump sum. The balance is taxable when paid as benefits

• All investment gains (capital and income) accumulate tax efficiently

Tax BenefitsThe Creative Pension Trust is an HMRC approved occupational pension scheme, which operates as a Net

Pay arrangement, offering a number of favourable tax advantages:-

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The Creative Pension Trust has both a default

investment approach (as required by law) and

access to some alternative investment

options for employees should they decide the

default investment strategy is not the most

suitable for them.

The default investment strategy is the Strategic

Pension Approach. This is set by the Trustees of

the scheme, having taken advice from our in-house

Investment Committee which comprises members

of our Group company, Creative Benefits Limited.

The Investment Committee members are twice

winners of the Financial Adviser Life and Pensions

awards.

On joining the scheme all contributions are

automatically invested into this unless the

individual member chooses otherwise.

All of the scheme’s investments are managed

by Scottish Widows.

Years to retirement Asset mix

Shares Bonds Cash

15+ 70% 30% 0%

10 40% 60% 0%

5 40% 60% 0%

0 0% 0% 100%

How the money is invested Within the Strategic Pension Approach, the level

of investment risk to which members are exposed

reduces as they approach the normal retirement

date. As members get closer to retirement,

the investment funds used gradually adjust to

lower risk investments automatically. Although

this reduces the growth potential of members’

Retirement Savings Accounts at this point, it helps

to protect the value as their Normal Retirement

Age draws near.

This de-risking process is called ‘lifestyling’ and

is widely used. Importantly, the whole process is

automatic.

The table below shows how the Strategic Pension

Approach works at key landmarks leading up to a

member’s retirement.

As the table shows, the changes in investments

are made over time to try to smooth out market

volatility.

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On joining the scheme, each employee will have their own Retirement Savings Account. The cash value of the

members Retirement Savings Account is then used to provide retirement benefits for the member, or for their

beneficiaries should the member die before they take their benefits.

Member benefits

Each new member will be provided with a

Welcome Pack. This will provide details of the

scheme and ensure that your employees have a

point of contact should they have any questions.

Members will be able to go online to access

information about their pension scheme, as

well as visiting a dedicated website www.

creativepensiontrust.co.uk, to get more

information.

Members with pension funds elsewhere can

transfer these into Creative Pension Trust. On

transfer, the funds would then be invested in the

same way as the rest of their pension contributions

unless the member instructs us otherwise.

Members who leave the scheme can transfer

their accumulated Retirement Savings Account

to another pension scheme if they wish. There

are no penalties or charges applied to any funds

transferred from the scheme.

Welcome pack

Easy online access

Transfers in

Transfers out

The Normal Retirement Age under the scheme is

65 but employees can start receiving their benefits

at any time from age 55 onwards.

Major changes in the law relating to the way

employees can take their benefits at retirement

were introduced in April 2015 (known as Pension

Freedoms) and a far wider choice is now available

to them.

Retirement Benefits

The range of options open to your employees includes:–

• A Lump Sum Payment – your employees can elect to receive all of their Retirement Savings Account as a single lump sum payment, up to 25% of which would be paid tax free. This of course would be instead of an income in retirement and could result in them paying very high rates of tax on the balance in the year in which their Retirement Savings Account is encashed. Employees should consider the situation very carefully before selecting this option

• Tax Free Lump Sum – employees can take 25% of their Retirement Savings Account as a tax free lump sum and this is an option which is widely exercised

• Purchase of an Annuity – an employee can use part or all of their Retirement Savings Account to purchase an annuity. With a fall in annuity rates and the greater flexibility of the new ‘Pension Freedoms’ regime, this has become a less popular choice for many employees

• Drawdown – we can facilitate services for employees to draw retirement income directly from their Retirement Savings Account at level, increasing or fluctuating amounts to meet their personal circumstances. Drawdown is becoming an increasingly popular option

There is no requirement for employees to draw

their retirement savings in whole or part when they

retire. They can leave their Retirement Savings

Account invested and take benefits to suit their

convenience. They can pass on the remaining, or

even all their pension assets, on their death to their

dependants subject to the relevant tax regulations

and underlying terms of their pension scheme.

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The variable monthly member fee is designed to give all members fair value, irrespective of how much they pay

in. As a further safeguard, for those paying in small amounts (less than £5 per month) there are no monthly

member fees. Similarly, once an employee has left the scheme no monthly member fees are collected if the value

of their Retirement Savings Account falls below £50.

The government has set out the maximum amount

that workplace pension schemes can charge for

automatic enrolment purposes. The charges

collected within the Creative Pension Trust are

within this framework.

Members pay charges from their Retirement

Savings Account. That is, there are no fees or

charges they have to pay on top of their pension

contributions. These charges are taken to pay

towards things like the scheme administration,

investment management, independent auditors

and the independent trustees.

The member charges are made up of two parts: an

annual management charge and a monthly member

fee.

The annual management charge is 0.4% pa of the

value of the member’s Retirement Savings Account.

The monthly member fee varies depending on

the employee’s earnings and whether they are

active members (paying contributions) or deferred

members (they have left or stopped paying in). The

charges are summarised in the table below:

From April 2019

Active £2.00

Deferred £1.20

The cost to set up, maintain and ensure continued auto enrolment compliance on behalf of the employer is

£21.50 per month (plus VAT) regardless of the number of employees who join and contribute to the Creative

Pension Trust. This employer charge will be payable to Creative Auto Enrolment and will be collected by direct

debit from the employer.

Employer Charge

Member Charges

*Qualifying Earnings, for the 2019/20 tax year, is made up of salary, wages, commission, overtime, bonuses, Statutory Sick Pay and Statutory Parental Pay between £6,136 and £50,000 per year, or £512 and £4,167 a month, or £118 and £962 a week.

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Scottish Widows manages the Creative Pension

Trust investments.

Scottish Widows is part of Lloyds Banking Group,

one of the UK’s largest and best known financial

services companies.

In 2015, more people associated Scottish Widows with being ‘a leading pension provider in the UK’ than any other major Life, Pensions and Investment brand.*

Investment management

Scheme sponsorship and management

The scheme sponsor and manager is Creative Auto

Enrolment.

Creative Auto Enrolment specialises in providing

UK businesses with the most appropriate solutions

to Auto Enrolment – it’s the only thing they do.

They build better solutions by combining their

extensive knowledge of pensions and their clients

with a creative, entrepreneurial approach to

problem solving. The result is a radically simple

approach to auto enrolment.

They build better solutions by combining their extensive knowledge of pensions and their clients with a creative, entrepreneurial approach to problem solving

*Source: Hall and Partners Brand Tracking Survey 2015. 4,144 interviews conducted among households (AB, C1, C2) responsible for household financial decisions.

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Other services are available for a fee if they are needed

Consultancy ServiceA complete range of services for your business and your employees to ensure that your scheme meets your

objectives. This could be a scheme arranged simply to comply with Auto Enrolment regulations or the most

sophisticated scheme possible that incorporates a wide range of contribution levels and benefits for your staff

and your executives.

Communication and Employee AwarenessWhatever level of benefits your scheme provides it is important they are properly communicated to your

employees. We offer a wide range of employee communication services, including guidance and if required,

personal regulated investment advice, to ensure that your employees understand and appreciate your pension

scheme.

Personal Financial Planning ServicesYour executives and your staff often need advice, not only related to their pension scheme investments, but

to cover the entire financial planning spectrum. Our Financial Conduct Authority (FCA) regulated financial

planning advisers can provide a personalised service for them.

Additional services

About us

Award WinnersWinning awards is always a great

endorsement so we are delighted to have

won a number of accolades including the

2016 Financial Adviser – Group Pension

Adviser of the Year Award and the Group

Pension IFA and Overall IFA of the Year

Award in 2011 and 2012. We have also

been shortlisted for a number of other

prestigious awards.

The Creative Group is an award

winning business specialising in Pension

and Benefit Schemes, Auto Enrolment

and Personal Financial Advice.

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Creative Pension Trust is an occupational pension scheme governed by Pan Governance LLP (company number OC333840) of 3 Castlefield Court, Church Street, Reigate, Surrey, RH2 0AH. The scheme is sponsored by Creative Auto Enrolment (company number 8554978). The registered office is Cannon Place, 78 Cannon Street, London, EC4N 6AF.

Helpdesk phone number: 0345 606 0424

Online: www.creativeautoenrolment.co.uk.

Email: team@creativeae.co.uk

CAE/0919/230