Auto-enrolment pensions – Re-enrolment requirements
If you own a business with more than one employee, you should already be aware of the requirement to have an automatic enrolment pension scheme. You may think that, once you had the scheme in place, had some staff opt out, and declared compliance that was the end of the matter. However, this initial assessment actually has to be repeated every three years.
The automatic re-enrolment requirement
After three years in auto-enrolment, and every three years thereafter, employers are required to re-assess their employees for the scheme. If any employees not in the scheme qualify for auto-enrolment, they must be enrolled as they would have been under the initial assessment. Once the employer has undertaken this review, they need to make a new Declaration of Compliance to The Pensions Regulator to show that they are continuing to meet their legal obligations in this area.
Date for re-enrolment
Whilst they are required to undertake the assessment around the third anniversary of being in the scheme, there is some leeway in choosing the precise date this is undertaken. The key date is the third anniversary of the original staging date (the date at which the employer became liable to operate auto-enrolment for the first time). The re-enrolment date can be as early as three months before this date, or as late as three months after it. Whatever date is chosen applies to all employees, regardless of when they were first enrolled into the scheme.
As for when they originally joined auto-enrolment, employers must make sure that they have all appropriate software and systems in place by the re-enrolment date. This is because the requirement to calculate pension contributions and pay them into a scheme will take effect on that date.
The Pensions Regulator provides a calculator to help employers to work out their re-enrolment dates. This requires the PAYE scheme reference and auto-enrolment letter code. (tinyurl.com/yddzzwps)
Carrying out the assessment
The assessment that the employer is required to carry out is similar to the original assessment they will have undertaken. (See The Pensions Regulator’s Detailed Guidance for Employers tinyurl.com/ydg2uy6f) The assessment only applies to employees who are not already enrolled in the scheme.
There are three main categories of employee that will need to be assessed.
• Those who opted out of auto-enrolment when it was first offered.
• Those who have left the pension scheme under its own rules, but have not opted out.
• Those who have reduced their level below the auto-enrolment minimum amounts for employees (opting down, which is not permitted by all schemes).
Once the assessment has been carried out, any qualifying employees must be re-enrolled. The employer must write a letter to affected employees informing them of the new assessment, and the intention to re-enrol them in the pension scheme. Both these actions must be undertaken within six weeks of the re-enrolment date. To assist employers, The Pensions Regulator provides a template for the letter to employees, though there is no legal requirement to use this. (tinyurl.com/ybanuq96)
Declaration of Compliance
As with when they originally set up their scheme, employers are required to submit a Declaration of Compliance to The Pensions Regulator. This document is required, even if the process has found no employees to which re-enrolment obligations apply. This must be submitted within five months of the third anniversary of the staging date. This deadline is fixed, regardless of what re-enrolment date is used by the employer. Those taking advantage of the full three month delay to undertake the assessment itself will therefore only have two months to submit the Declaration. Failing to meet this deadline is likely to result in enforcement action against the employer, including fines.
The Pension Regulator should pre-populate the Declaration of Compliance form with the details provided on the original Declaration. These include.
• Pension scheme name
• Address of the pension scheme provider
• The type of pension scheme (e.g. Occupational Pension Scheme)
• The Pension Scheme Registry Number
It is entirely possible that employees who chose to opt-out will wish to continue to remain outside the scheme. This must be done within one month of the employee in question being re-enrolled. The employer needs to keep the opt-out notices to show that the employee has made this decision. Any employees who do opt-out at re-enrolment will still need to be assessed at the next re-enrolment date.
We hope you have enjoyed reading this article from Hastings Independent. The future of this volunteer led, non-profit publication would be far more secure with the aid of a small donation. It only takes a minute and we would be very grateful.