Every 3 years, employers have a duty to re-enrol certain staff – even if they have previously opted out of the pension scheme – and to re-declare your compliance. Business Garage highlights some key points.
Pensions re-enrolment usually occurs 3 years after your company’s staging date (you can check all the dates for your company on The Pension Regulator’s website). Remember, it’s important not to miss any of the deadlines as you could incur a penalty charge!
The steps to take are:
1.Choose a re-enrolment window
Your company needs to select a re-enrolment date from within a six-month window, starting three months before the third anniversary of your automatic enrolment staging date and ending three months after.
Choose the date wisely and avoid busy periods within your business so you have time to look at this carefully and ensure your compliance.
2. Assess your employees
Next you will need to assess your staff. You don’t need to worry about staff already enrolled, however, you must assess staff who have:
- opted out of your pension scheme
- left your pension scheme after the end of the opt-out period
- stayed in your pension scheme but have chosen to reduce the level of their pension contributions to below the minimum level (keep an eye out for our upcoming article on changes to contributions)
Employees who left your automatic enrolment pension scheme more than 12 months before your re-enrolment date and are aged between 22 up to State Pension Age and earn over £10,000 a year (or £833 a month, or £192 a week) must also be re-enrolled.
If you have staff who need to be re-enrolled, this needs to be done within 6 weeks of your re-enrolment date.
Exceptions to the rule
You do not need to assess staff who, on your re-enrolment date:
- is already in the pension scheme you use for automatic enrolment (a qualifying scheme)
- is aged 21 or under
- is at state pension age or over
- has not yet had an automatic enrolment date (met the age and earnings criteria for automatic enrolment, or who has been postponed)
In addition to staff you must re-enrol, you can also choose to re-enrol certain staff into your pension scheme provided that they are:
- aged between 22 up to State Pension Age
- and earns over £10,000 a year, or £833 a month, or £192 a week
- left your automatic enrolment pension scheme in the 12 months prior to the re-enrolment date
- was paid a winding up lump sum in the 12 months before your re-enrolment date, then left your employment and were later re-employed by you
- has given notice or been given notice of the end of their employment
- has primary, enhanced or fixed protection from tax charges on their pension savings
- holds the office of director with the employer
- is a partner in a Limited Liability Partnership which is the employer, and is not treated for income tax purposes as falling within HMRC’s ‘salaried member’ rules
3. Write to employees you have re-enrolled
Within 6 weeks of the re-enrolment date, you must have written to staff who you have re-enrolled. You can amend your original enrolment letter template as the principle is still the same, for example, the employee can opt out.
4. Complete your re-declaration of compliance
Finally, you need to complete your re-declaration of compliance on The Pension Regulator’s website 5 months after the third anniversary of your staging date. So for example if your staging date were 1st January 2016, your third anniversary would be 1st January 2019 so your re-declaration of compliance would be be due on 30th May 2019.
Re-enrolment is an ongoing duty, so schedule time to go through this process again in another 3 years.
Business Garage provides a professional and expert payroll and HR service to clients which includes pensions administration. Contact us on firstname.lastname@example.org or 01235 433099 for a free initial consultation.
Look out for our upcoming Pension Changes Ahead article for more pensions updates.