Whilst some employers are still awaiting their first staging date, many larger employers will be facing their first automatic re-enrolment. Do not be one of those employers who mistakenly believe it is just the same process as automatic enrolment.
There are two different types of re-enrolment; “immediate” re-enrolment and “cyclical” re-enrolment.
An employer is required to automatically re-enrol eligible jobholders into a qualifying pension arrangement in cases where they have previously been automatically enrolled but are no longer an active member as a consequence of an action undertaken by the employer or the scheme trustees.
After three years of an employer’s staging date, it must automatically enrol any eligible jobholders into a qualifying pension arrangement (provided they are not already active members of a qualifying pension arrangement).
The following will focus on the key points and issues which an employer will need to consider in relation to “cyclical” re-enrolment.
The Re-enrolment Date
One of the first things which an employer will need to consider is the date it will use for re-enrolment. The employer is able to choose a re-enrolment date which falls within a six month window which runs from three months prior to the date of the three yearly anniversary date and three months after the date of the three yearly anniversary date. The re-enrolment date has to be the same date for all eligible jobholders i.e. a different date cannot be used for different eligible jobholders.
Employees who will need to be automatically re-enrolled
The process which will need to be undertaken is similar to that when the employer reached its staging date some three years’ prior i.e. the employer will need to assess its workforce and determine if any of its employees will need to be automatically re-enrolled. There are however, some exceptions to this:
- The employer will not be able to use postponement at the re-enrolment date; and
- It will only apply to those eligible jobholders who have previously opted-out.
It is worth noting however that an employer does not (although it can if it chooses to do so) have to re-enrol those eligible jobholders who left the qualifying pension arrangement i.e. by opting-out after being automatically enrolled or by opting-out in accordance with a scheme’s Trust Deed and Rules within the 12 months prior to the re-enrolment date.
Declaration of Compliance
Following re-enrolment, a declaration of compliance must be submitted to the Pensions Regulator within two months of the employer’s automatic re-enrolment date.
If any employers do not comply with their automatic re-enrolment duties, then the Pensions Regulator has the power to issue compliance notices as well as imposing fixed and escalating penalties.