Auto-enrolment for the largest companies seems like a long-distant memory – especially given the onslaught of changes that subsequently have faced the pensions industry, says Tasha Hartley
It is now over three years since the first auto-enrolments, and since October 2015 the earliest stagers have been facing the next stage of the process: re-enrolment.
Although for some employers this is a formality that is simply part of the regulations around pensions, for others it is a good opportunity to evaluate the success of their scheme. It also gives employers a chance to benchmark – or improve on – the support services they chose.
HOW DOES IT WORK?
Automatic re-enrolment is a sizeable task requiring proper planning, and businesses approaching their re-enrolment date need to prepare thoroughly.
As employers, you will have three months on either side of the third anniversary of your staging date to choose your re-enrolment date. This gives you a six-month window, and you must have the same re-enrolment date for all the staff you have to re-enrol.
You must undertake an assessment of your staff to determine who must be re-enrolled. This applies to eligible staff who did the following, more than 12 months before the chosen re-enrolment date:
- Opted out of the auto-enrolment pension scheme
- Ceased active membership of the pension scheme after the end of the opt-out period
- Stayed in the pension scheme but have chosen to reduce the level of pension contributions to below the minimum level and who meet the age and earnings criteria.
If any of the above happened within 12 months of your chosen re-enrolment date, you may decide to automatically re-enrol the eligible staff, however you are not required to do so.
And for those employers without any eligible staff to re-enrol, you must still re-declare your compliance.
If you have staff to automatically re-enrol, you must complete the re-declaration of compliance within two months of your re-enrolment date. If you don’t have any eligible staff, your re-declaration deadline date will be the day before the third anniversary of your original declaration of compliance.
Ensure that staff are put into an auto-enrolment pension scheme within six weeks of your re-enrolment date.
If you have eligible staff, you’ll need to follow the same steps as when you first auto-enrolled them. The pension scheme you use must meet the auto-enrolment criteria.
Once you’ve automatically re-enrolled eligible staff, they remain in your scheme unless they choose to opt-out or cease membership.
HOW DOES IT HELP?
While re-enrolment might seem like an onerous task, it also gives them opportunities. Re-enrolment presents a good opportunity to:
- Review existing processes internally
- Re-promote the pension scheme to all employees as well as opt outs
- Review scheme advisers, the pension scheme itself and the software used for auto-enrolment
In terms of the administration, communications and structure of your pension scheme – as well as the flexibilities it offers to staff at retirement – re-enrolment is an ideal chance for employers to use the knowledge and experience they have gleaned over the past few years to review the offering they have in place.
Some might not be happy with the service they have received, while others might want to benchmark against other providers.
Many companies scrambled to get a scheme into place ready for their staging date – and now we are seeing companies suffering from a poor scheme, inefficient processes or a lack of support from their provider. So now is the time to check any doubts about the success of your process and put things right before enrolling another tranche of employees.
A further benefit of re-enrolment is the opportunity it affords to employers to re-engage their employees with their pension: to discuss with both opt-outs and current members the benefits of the scheme they have in place.
Ultimately, our advice is to not leave things to the last minute and risk noncompliance. At Johnson Fleming we pride ourselves on our administration services and the level of support provided to our customers; we offer a one-stop solution to manage your scheme, governance, communications and benefits administration.
Tasha Hartley is a qualified consultant for Johnson Fleming, leading workplace pensions and employee benefits specialist. For more information, please contact us on 0121 571 223 or email firstname.lastname@example.org, or visit the Johnson Fleming website