Pension re enrolment – so you thought auto enrolment was all over……..?!
Pension re enrolment and re-declaration: are you at risk of legal action???
If you thought auto enrolment was a once and done “affair”, then you may need to think again! You need to understand that pension re enrolment now has to be considered.
Re-enrolment and re-declaration are two stages in the process that most employers have to go through every three years.
Employers must re-assess staff who opted out of or left their pension or reduced their contributions, then re-enrol those eligible back into the scheme.
Employers then need to submit a re-declaration of compliance (within five calendar months of the third anniversary of their staging date).
When it comes to an employer’s re-enrolment date – the day an employer assesses their staff and put them back into a pension scheme – an employer can still choose any date that falls within three months before, or three months after the anniversary of their staging date.
We’ve found employers tend to find it easier using the third anniversary of their staging date and tend to encourage them to do this for simplicity.
Re-enrolment is a two-stage process, with re-declaration being the second stage.
Remember, not doing both stages may lead to legal action.
Notifying new employees EVEN if they don’t have to be automatically enroled
One thing many employers have overlooked is that when a new employee is hired and added to the payroll they must be given the option to be included in the company’s Auto Enrolment scheme.
This applies even if they earn below the £10,000 per annum threshold; in fact if you intend paying them anything at all you must still let them know their rights.
So if you are a small director only company for example, the moment you add a non-director to your payroll you have an obligation to advise them of the right to opt-in to the company Auto Enrolment scheme if they so wish and pay the contributions themselves as a deduction to their pay.
Although it’s probably fairly unlikely that anyone on really low earnings will wish to pay pension contributions themselves which will reduce their take home pay, in the unlikely event that they do, you will need to deduct those contributions from their pay and pay them over to the pension company.
A simple template letter prepared by The Pensions Regulator for you to send to any new employee can be downloaded here:- Template AE Letter.
This simple letter will only take you a few minutes to customise and send and should cover you in the event of an inspection further down the line.
About Kevin Wheeler
My career in the financial services industry started over 30 years ago and I joined Sterling & Law in 2014.
I can offer a wealth of experience in both the personal and corporate sectors, in areas such as (workplace) pensions, pension transfers, retirement provision, life insurance, investment and inheritance tax planning.
I am also Sterling & Law’s specialist auto enrolment project manager, designing, planning and implementing auto enrolment solutions for employers since the auto enrolment regulations were introduced in 2012.
I provide a thorough professional service and aim to develop lasting relationships with my clients.
I am married with two teenage children and enjoy playing tennis, table tennis and going on bike rides with the family.