As per the auto-enrolment legislation, it is mandatory for you as an employer to re-enroll certain qualifying employees back into your pension scheme and thus re-assess them every three years. The re-enrolment scheme was launched with the intention to give eligible employees that may have decided against saving in a workplace pension, another chance to re-think about their decision and based on the belief that with change in time and circumstances, people’s ability to think and take decisions also change and while they might not have felt in a position to invest in pension scheme, over a period of 3 years, may think and feel differently.
Going by this belief, bigger firms have inculcated re-enrolment as a part of management whereas smaller firms are still getting their head around the concept. However, it is advisable to be prepared because it is neither a simple and straightforward method nor is a one-time event only.
There are four main steps to re-enrolment which are:
Choose a re-enrolment date: Picking a date is very first step when it comes to re-enrolment. By default an employer’s re-enrolment date falls on the third anniversary of their automatic enrolment staging date. However the choice of re-enrolment date lies with you and you have a 6 month window to choose from and thus give you an opportunity to synchronize re-enrolment date with other processes of your business and to avoid any seasonal peaks. Six months window starts three months before the 3rd anniversary date of your automatic enrolment staging date and ends 3 months after it and though you have got a six month window to choose your re-enrolment date from, it is advisable to start as early as possible.
For example: If your staging date was on 1st June 2016, then third anniversary of your staging date will be on 1st June 2019 and as mentioned above, your re-enrolment date starts 3 months before the third anniversary of your staging date. Thus in this case, your 6 months window for re-enrolment is from 1st March 2019 – August 2019.
However you need to be careful while choosing your date because once selected, it cannot be postponed for a later date and the selected date is applicable to all staff i.e. there is no option to choose different dates for different staff or department. Once the selected date arrives, employers must assess their employees. Also it is not mandatory to inform the Pensions Regulator regarding your chosen re-enrolment date until you re-certify compliance.
Assess and re-enrol staff: Once you have selected your re-enrolment date, you have to wait for it to arrive in order to start assessing your employees for the re-enrolment. The employees whom you are considering to re-assess must fulfill below mentioned criteria:
- They have opted out of your pension scheme in between.
- They have left your pension scheme after the end of the opt-out period.
- Who are still a part of your pension scheme and fulfill age and earning criteria to be a part of the scheme, however they have reduced their contributions to below the minimum level.
However, there are certain employees who meet the above mentioned criteria but cannot be assessed for the re-enrolment because they fall into one of these categories:
- They are of age 21 years or below.
- They are already a part of the pension scheme you are using for automatic enrolment.
- They are at State Pension Age (SPA).
- They either haven’t reached the required age and earnings for automatic enrolment or have postponed the same.
As an employer, you might come across a situation where there are certain employees who meet the age and earnings requirement for the re-enrolment, you have to choose whether or not to re-enrol them as per the below circumstances:
- Employees you must re-enrol: As a employer, you must re-enrol:
a. Employees who have left your automatic pension scheme more than 12 months before your selected re-enrolment and
b. Fulfils the age and earnings requirement i.e.
i. Is of age between 22 and State Pension Age and
ii. Has earning of £192 per week or £833 per month or £10,000 per year.
- Employees you can choose to re-enrol: Apart from the ones whom you must re-enrol, you can exercise your discretion on the employees who belong to the below mentioned circumstances:
a. Those who left your automatic enrolment pension scheme in the 12 months leading up to your re-enrolment date.
b. Those who hold the office of director with the employer.
c. Those who have primary, enhanced or fixed protection from tax charges on their personal savings.
e. Those who have given notice or been given notice of the end of their employment.
f. Those who were paid a lump sum amount in the 12 months before your re-enrolment date but left your employment and then re-employed by you.
After the assessment gets over, you will end up in either of the two situations i.e.
- You have staff to re-enrol: Once you have assessed the employees and zeroed down the ones whom you have assessed and decided to re-enrol, your next step is to re-enrol them at the earliest into your workplace pension scheme within 6 weeks of the selected re-enrolment date. Apart from the employees, you can also choose to re-enrol other staff members such as directors as well. After you have assessed your employees and have re-enrolled them, you must start making your contributions into the pension scheme.
- You don’t have staff to re-enrol: And in case you don’t have any staff to re-enrol then also you need to complete your re-declaration of compliance to tell the Pensions Regulator that you have fulfilled your re-enrolment duties. This is an important step because failing to do so will attract fees and penalties from the same.
- Write to staff you have re-enrolled: Once you have selected the employees to re-enrol, it becomes your duty to write to each one of them informing about their re-enrolment and more than a moral duty, it is your legal duty and you must do the same within 6 months of your re-enrolment date. Normally, this is done by your pension provider on your behalf however if you wish to do so by yourself, you can use any of the templates available on https://www.thepensionsregulator.gov.uk/en/business-advisers/automatic-enrolment-guide-for-business-advisers/supporting-resources. Your letter to the employees must be a detailed one and should explain that they have been enrolled and what contributions will be paid into the scheme. Apart from this, your letter must also explain their right to opt out of the scheme if they want to do so.
Complete your re-declaration of compliance: This is last and most important step because even if you have done above 3 steps and miss out on this one, you will be charged penalty from the Pensions Regulator. As an employer it is your legal duty to complete and submit your re-declaration of compliance well within time in order to show that you have completed duties of an employer for re-enrolment. Completion of re-declaration of compliance is a mandatory step even if you do not have any staff to re-enrol as mentioned above.
In order to submit your re-declaration of compliance well within time, it is important for you to start with it as soon as you have re-enrolled the employees or as soon as you figured out that you have no employee to put into your pension scheme.
As per the norms of the Pensions Regulator, you have 5 months window from the third anniversary of your automatic enrolment staging date in order to complete and submit your re-declaration of compliance. Also the deadline for the re-declaration of compliance does not get changed or affected as per your selected re-enrolment date. It is advisable to complete the required formalities and paperwork for the re-declaration of compliance and not to leave the same for the last day because you might need some time in order to assess certain information.
If you are taking an expert’s help in order to complete your re-declaration of compliance, you must be clear and know who will be completing the re-declaration i.e. if you are completing it yourself or someone else is doing it for you and even if later is the case, you still need to ensure that it is completed and submitted well within time.
There are certain ongoing duties which as an employer you must continue to do including:
- Keeping records – As an employer you must keep an accurate and updated record of what you have done.
- Managing opt out requests and issuing refunds to the employee
- Paying employee and employer contributions into the employees’ pension pot.
- Assessing certain employee pay period.
- Enrolling employees who are or have become eligible.
Re-enrolment is an ongoing duty and it must be repeated every three years and at the next cycle, you as an employer must repeat the re-enrolment assessment process as mentioned above.