United Kingdom

Re-enrolment could pose further challenges for employers

March 2015

 

A significant number of employers are continuing to find auto-enrolment an administrative burden, with larger employers likely to find their on-going auto-enrolment duties particularly challenging.

Industry research has shown that just over three quarters of employers are noticing the added burden created by auto-enrolment, whilst figures released by The Pensions Regulator revealed that 169 employers have been fined for failing to comply with auto-enrolment legislation.

Later in 2015, larger employers who have already staged are set to re-enrol employees who had previously opted-out in 2012.

But as Employee Benefits reports, re-enrolment brings additional complexities for the employer who must identify employees who had been previously automatically-enrolled into their employers scheme but who had left the scheme more than twelve months before the re-enrolment date.

Tim Middleton, technical consultant at the Pensions Management Institute warned that distinguishing between those who are being enrolled for the first time and those who are to be re-enrolled was ‘vitally important’:

“This is because postponement cannot be used in the case of re-enrolment. Following on from this, it can be seen that communications material issued needs to address the different circumstances of those being re-enrolled and those being enrolled for the first time. Employers will therefore need to ensure that payroll software correctly identifies the two categories of the employee affected,” he said.

David Parfett, Senior Corporate Pension Consultant at Aon Employee Benefits added: “The first step for an employer will be to agree their re-enrolment date - the employer can choose this date from any date that falls within a six (calendar) month window, starting three months before the third anniversary of their original staging date and ending three months after that anniversary. For example, employers may wish to align the date with other key dates in their business calendar or avoid seasonal peaks. There will also be a requirement to re-declare their compliance (re-registration).”

However, despite the potential challenges re-enrolment could bring, it can also provide another opportunity to engage with employees about pensions as well as for employers to review their existing systems, especially as many payroll providers were not set up to handle auto-enrolment processes in 2012.

Re-enrolment can be a great opportunity to ‘correct any issues’ which employers have had over the last three years or fine-tune the current processes they have in place to benefit both the employer and the scheme members, Parfett said. He continued: “While the process this time around should be less onerous than it was initially, it will still need careful planning to make certain that all the employee audiences are covered, that providers can support them with any new compliance requirements, and that the Declaration of Compliance is completed by the statutory deadline.”

 

 

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