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What you need to know about automatic re-enrolment

Accountancy

By Michelle Rowe, Senior accountant at Hive Business

Do you ever get the feeling that your “to do” list never gets any shorter? As soon as you tick one thing off, you seem to add another three. Then, there are those annual tasks that creep up on you like your car insurance renewal, your partners birthday or even that event on 25th December (I would give it its proper name, but the word is banned in our house!). It’s never-ending.

It’s the same with employing staff. Just when you think you have a handle on the monthly payroll and your staff are settled, something puts the cat amongst the pigeons and the whole process gets more complicated. Automatic enrolment and workplace pensions gave us all a few headaches a few years ago and now that it’s become the status quo, it’s set to rear its head again with the process of automatic re-enrolment.

What is automatic re-enrolment?

Cyclical automatic re-enrolment occurs approximately every three years after your original staging date (as previously set by The Pension’s Regulator). Essentially, it is the reassessment of your staff to see whether any should be re-enrolled in your workplace pension scheme. There are four steps to the process.

STEP 1 – Choose a re-enrolment date

You can choose your own re-enrolment date. The reassessment of your staff can be done at any time from 3 months before the 3rd anniversary of your staging date and 3 months after. For example, if your staging date was 1st April 2016, your re-enrolment date can be at any time between 1st January 2019 and 30th June 2019. It’s important to do the reassessment before you finalise the payroll for your chosen date since you may need to take calculate pension deductions from any staff that need to be re-enrolled.

STEP 2 – Assess and re-enrol staff

You don’t need to assess your entire workforce. You can exclude:

  • those already enrolled in your pension scheme;
  • those aged 21 or under;
  • those who are at state pension age or over;
  • those workers currently within a postponement period.

Effectively, you need to be looking at workers that have previously opted out or voluntarily left the pension scheme to see if they are “eligible jobholders”. To remind you, an “eligible jobholder” is a worker aged between 22 and the state pension age, who normally works in the UK and is earning over £10,000 per year.

STEP 3 – Take action

If you have “eligible jobholders” who are not currently members of your workplace pension scheme, you must automatically re-enrol them now. That means you have to calculate and take pension deductions from their pay and, within six weeks, write to the staff member explaining they have been put back into your pension scheme. It should be noted that postponement cannot be used in the process of re-enrolment.

There are a couple of exceptions to automatic re-enrolment. If the staff member opted out or left the scheme in the 12 months up to your re-enrolment date, or you have a staff member who is ending their employment within six weeks of your re-enrolment date, they do not have to be re-enrolled in your scheme.

STEP 4 – Re-declare your compliance with The Pensions Regulator (TPR)

Just like you did following the setup of your workplace pension shortly after your staging date, you will also need to re-declare your compliance with the regulations. This can be done online with further details available on The Pension Regulator’s website. The deadline for your re-declaration is 5 months from the 3rd anniversary of your staging date.

It may be that your pension or payroll provider can help with some (or all) of these tasks but, if you’d like to find out more about the process of automatic re-enrolment or our payroll services in general, please call us on 01872 300232 or email [email protected].

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