Employers - workplace pension re-enrolment explained

Owners of businesses with at least one employee will have heard about how they are duty bound to have an automatic enrolment workplace pension scheme in place.

However, they may not be aware that they need to review their position every three years, as Matt Lyons from The People’s Pension explains.

What is automatic re-enrolment?

Re-enrolment is a cyclical process, broadly the same as for automatic enrolment, repeated every three years - so it’s sometimes referred to as ‘cyclical re-enrolment.’

Every three years employers need to re-assess their workforce and enrol anyone who is not already in their workplace pension scheme, with effect from their chosen re-enrolment date.

They will need to re-declare their compliance with The Pensions Regulator, to show they are continuing to meet the Government’s regulations.

Choosing a re-enrolment date

Employers can choose any date within a six-month ‘window’, centred on the third anniversary of the employer’s original 'staging date' or 'duties start date'. This is when the employer’s auto enrolment duties started, as opposed to the date when any individual workers joined the pension scheme.

So, for example, if an employer staged/started on 1st October 2016, they could choose a re-enrolment date on any day between 1st July and 31st December 2019, but they must use the same re-enrolment date for all staff being re-enrolled.

The employer’s payroll, HR and software processes will need to be ready to go, since all pension contributions will need to be calculated with effect from whichever re-enrolment date they choose.

The Pensions Regulator provides a useful calculator to help employers to work out their re-enrolment date.

Assessing staff on the re-enrolment date

Employers will need to carry out an assessment of certain employees on their re-enrolment date to see whether they meet the age and earnings criteria to be re-enrolled.

This applies to any staff who were previously assessed for automatic enrolment and meet the age and earnings criteria who:

• opted out of the automatic enrolment pension scheme
• left the pension scheme under the scheme rules, (but did not opt-out)
• stayed in their pension scheme but have chosen to reduce the level of pension contributions to below the minimum level required by automatic enrolment (sometimes referred to as “opting down”)

If any of the above events happen within 12 months of an employer’s chosen re-enrolment date, the employer can choose whether to enrol eligible staff. If they choose not to include them, these staff should be re-enrolled at the next re-enrolment date in another three years’ time.

Re-enrolling staff

Having carried out the assessment of their employees, the employer must re-enrol any affected members of staff into their automatic enrolment pension scheme within six weeks of the chosen re-enrolment date.

By this date, employers must also write to each member of staff to confirm they have been re-enrolled into the pension scheme.

A re-enrolment letter template which can be used for this purpose can be found on The Pension Regulator's website. 

Declaration of Compliance

Employers are legally required to confirm they have complied with their duties by completing their declaration on The Pensions Regulator website, even if they did not have any employees to re-enrol into their pension scheme.

All employers must submit a Declaration of Compliance within five calendar months of the third anniversary of their staging date. However, it is important to note that the declaration date doesn’t change according to the re-enrolment date chosen by the employer.

The Pensions Regulator pre-populates the key details entered by the employer in their original/previous Declaration of Compliance.

Since the submission of the Declaration of Compliance is a legal requirement, any failure to complete it on time could result in enforcement action, including fines.

The person completing the Declaration will need to include their personal details, the employer’s details – including information on their PAYE schemes and the workforce, as well as details of the pension scheme they are using, including:

• Pension scheme name
• Address of the pension scheme provider
• The type of pension scheme (eg: Occupational Pension Scheme)
• The Pension Scheme Registry Number

Opting out

There is a one-month window in which members can opt-out of the pension scheme. If any staff choose to do so, the employer must ensure their opt-out notices are processed and records kept accordingly.

How we can help

At TaxAssist Accountants we have relationships with pension providers including The People’s Pension and will be able to put you in touch with the one which best meets your businesses’ needs.

For further details about how your local TaxAssist Accountant can help please call 020 4502 9677 or use our easy online request form.

Date published 2 Jul 2018

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.