0370 1500 100

DWP consults on improvements to Auto Enrolment

Following the introduction of automatic enrolment last year, the Department for Work and Pensions (“DWP”) has published a consultation suggesting ways in which the automatic enrolment process could be simplified.

The consultation, headed “Technical Changes to Automatic Enrolment”, was launched on 25 March 2013 and will close on 7 May 2012. The DWP has put forward a number of technical changes to the legislation surrounding automatic enrolment, with the aim of improving the current operation. Most of the changes are proposed to take effect from April 2014; however, some modifications may come into force earlier.

Some of the proposed changes include:

  • Introducing a new way to determine a “pay reference period” to make it easier for employers to decide whether a worker is eligible for automatic enrolment;
  • The extended time limit for employers to pass contributions deducted from a jobholder’s pay to the pension scheme is to apply to all joiners rather than just eligible jobholders to increase consistency and simplify administration;
  • Relaxing the form and content of the statutory opt-out notice; and
  • Extending the so called “joining window” (i.e. the period which an employer has to complete auto enrolment of a worker into a pension scheme) from one month to six weeks, as it has proved difficult for some employers to meet the original deadline.

A further proposal in the paper relates to contractual enrolment. The DWP is proposing a change to the current legislation which would mean that an employer would not have to automatically enrol a jobholder who had recently opted out of a pension scheme into which they were contractually enrolled. Such jobholders are still likely to be subject to re-enrolment as part of the re-enrolment exercise which will take place every three years.

The DWP is also considering other reliefs for employers who provide good pension schemes. The DWP would like to explore methods of self certification for employers who are contractually enrolling all workers into an automatic enrolment scheme and ways to exempt these employers from explicit employer duties.

Nigel Bolton