- July 2, 2020
- Posted by: Gary Parsons
- Category: Pay, Reward & Benefits
Pensions re-enrolment is a legal requirement and companies cannot afford to get this wrong. Here we look at some tips that may assist companies to comply with their requirements.
1. Be prepared in advance for re-enrolment
Companies should ensure that they choose their cyclical re-enrolment date well in advance, and that they are ready to carry out the exercise on the chosen date. A certain amount of flexibility is permitted in that cyclical re-enrolment can be carried out anytime within a six-month period – the third anniversary of a company’s staging date will fall in the middle of this period.
Companies should consult with their chosen pensions provider well in advance of any re-enrolment exercise, as the provider may need to process a number of joining applications within a short space of time.
2. Ensure systems can cope with re-enrolment
Companies should consider whether it is possible to design their payroll and HR systems in such a way that it flags automatically when an employee meets the workplace pension eligibility criteria. For example, if an employee’s earnings drop below £10,000 per year but then rise above this level once again; or if an employee is transferred to the company’s overseas operations but then returns to the UK; or if an employee has previously opted out and the time for them to be cyclically re-enrolled is now due, will the company’s systems pick up on this?
If the company does not have systems in place that automatically identify eligible employees then they must ensure that they have a manual process that is sufficiently robust to clearly identify employees eligible for re-enrolment. This applies both to those whose membership needs to be restored via cyclical re-enrolment and by immediate re-enrolment.
3. Immediate re-enrolment means exactly that – it must occur immediately
Companies should note that anyone who meets the criteria for immediate re-enrolment must be re-enrolled to the scheme on the same day that their circumstances change.
4. Be prepared for opt-outs from those re-enrolled
Once employees have been re-enrolled, via either cyclical or immediate re-enrolment, companies should be prepared for the possibility that some of them may opt out during the following month, and be ready to deal with these opt out requests.
5. Inform the regulator
Once a re-enrolment exercise has been completed, companies must ensure that the relevant form, known as a ‘re-declaration of compliance’, is sent to The Pensions Regulator within five months.
6. Don’t try and rely on postponement
Companies should note that, unlike the process of enrolling staff into a workplace pension for the first time, there is no facility to use ‘postponement’ with re-enrolment. Postponement, in the context of setting up a scheme for the first time, allows companies to delay assessing whether certain employees will meet the eligibility criteria. This might be because the employees are employed on a contract of three months’ duration or less, they are in a probationary period or they have given notice.
Information contained within this article is intended for educational and illustrative purposes only. The information should not be relied upon and we offer no warranty against its use.