Three years on since the start of automatic enrolment, large employers are facing a new challenge.
Set out in the original auto enrolment schedule, employers are required to go through automatic re-enrolment every three years. Right now, the first tranche of large employers is currently going through this process of pensions auto re-enrolment.
In very broad terms, the activities involved in re-enrolment are more or less the same as the duties you carried out at your staging date or deferral date if you availed of postponement and will be made easier if you have stayed up to date as you’ve gone along. As good practice, whenever you run your payroll, it’s important to assess whether or not there are new employees who should be added to your scheme. Even if you’ve done this, there will be certain staff who also need to be re-enrolled. You are able to choose your preferred re-enrolment date, but it needs to be within a period that spans three months before or after the third anniversary of your staging date.
All appropriate, eligible employees who are not active members of a qualifying pension scheme will need to be automatically re-enrolled when the time comes. In order to identify who these people are, you should check for members of staff who have, within the 12 months before your chosen re-enrolment date:
- Opted out of auto enrolment
- Ceased active membership after the opt out period
- Have stayed in the scheme but have reduced their payments to below the minimum level
If you have staff in any of these situations who meet the age and earnings criteria, you can choose to re-enroll those members of staff, but you’re not obliged to do so. If you have staff who you have identified should be re-enrolled, you have a six-week period from your re-enrolment date to enroll any member of staff who should be enrolled. Once this has happened, the rules remain the same as before with regard to the employees right to opt out or cease membership, ie. they can do so within a one-month period of enrolment.
When you have carried out the re-enrolment process, you are required to complete a re-declaration of compliance on The Pensions Regulator’s website to conclude your responsibilities. Re-declaration deadlines are determined by whether or not you have staff to automatically re-enroll or not. If you do, then you have two months from your re-enrolment date to complete your re-declaration. If you don’t then you have until the day before the third anniversary of your first Declaration of Compliance (or the date you should have submitted it if you happened to submit it late) to do make your declaration.
If you have members of staff who need to be re-enrolled in the midst of a pay period, this could cause difficulties if there is a requirement for a pro-rata payment to be made. Whether or not you might face difficulties will depend on the capabilities of your payroll software, but bear in mind if you are facing difficulties that the regulations state that employers are not obliged to make or take pro-rated contributions. A good idea in situations where you might be required to make pro-rata payments is to choose a re-enrolment date that ties in with the start of your pay reference period.
Although re-enrolment shouldn’t pose problems for most employers, it’s important to be aware of your responsibilities and make sure you meet your deadlines. If you need help with your re-enrolment process, why not get in touch? We have teams of specialists who speak your language and are here and ready to help.