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Pensions re-enrolment: don’t get caught out

As an employer, did you know that you have a legal duty to re-enrol certain employees back into an automatic pension scheme every three years, even if they opted out the first time? Failure to do so could result in a penalty…

If you were one of the thousands of businesses that auto-enrolled employees in 2014, you may be approaching the crucial re-enrolment phase, which should take place approximately three years after your original staging date.

Employers are required to complete the re-declaration of compliance with The Pensions Regulator (TPR), even if they do not have any staff to re-enrol. The main qualifying threshold or ‘trigger’ for employees to be automatically enrolled has been maintained at £10,000 per annum for 2017/18.

Consider the following steps to help ensure that you meet your legal obligations and avoid a potential penalty.

Step one: Choose your re-enrolment date

You have a six month window from which you can choose a date for re-enrolment – this can be either three months before or after the third anniversary of your original staging date. Employers cannot opt to postpone their re-enrolment date, so be sure to choose a date that is achievable for your firm.

Tip: Check your payroll systems and personnel are prepared to deal with a potential increase in employees who may need to be re-enrolled.

Step two: Re-assess your workforce

TPR stipulates that you only need to assess employees who were previously auto-enrolled and have subsequently either:

  • asked to leave (opted out of) the pension scheme
  • left the pension scheme after the end of the opt-out period
  • stopped or reduced their pension contributions to below the minimum level (and who meet the age and earnings criteria to be re-enrolled).

You are not required to reassess employees who:

  • are currently in the pension auto-enrolment scheme (and meeting the minimum contribution requirements)
  • are aged 21 or under
  • are of or over the state pension age
  • do not meet the age and earnings criteria for automatic enrolment.

Following assessment, you should re-enrol eligible staff into a qualifying pension and begin making contributions within six weeks of your re-enrolment date.

Tip: Don’t forget to continually monitor employees’ ages and earnings, which may change their eligibility status.

Step three: Write to those staff that you’ve re-enrolled

You should write to each employee who has been re-enrolled into the pension scheme. This should be done within six weeks of your re-enrolment date.

Tip: Template re-enrolment letters are available on the TPR website – visit www.tpr.gov.uk/reenrol-letter

Step four: Complete your re-declaration of compliance

You are required to complete your re-declaration of compliance with TPR to let them know that you’ve met your legal duties. This should be done within five months of the third anniversary of your staging date. You should do this even if you have not re-enrolled any staff into the pension scheme.

Tip: Make sure TPR has your current contact details as it will write to you about your re-enrolment duties.

Further guidance on re-enrolment is available on the TPR website: www.thepensionsregulator.gov.uk.