Large employers to go through re-enrolment

23 September 2015

It is now three years since the beginning of automatic enrolment in October 2012 and large employers are now starting to go through cyclical re-enrolment, which must be done approximately every three years.

Certain staff will need to be automatically re-enrolled into a pension scheme and a re-declaration of compliance must also be completed on The Pensions Regulator’s website.

On the cyclical re-enrolment date, all appropriate eligible jobholders who are not already active members of a qualifying pension will need to be automatically re-enrolled - and postponement may not be used. The employer can choose whether or not to automatically re-enrol eligible jobholders who have ceased membership/opted-out within the previous 12 months.

If a worker is re-enrolled part way through a period, it may be necessary to calculate a pro-rata contribution, something not all payroll software is able to do. However, regulations which came into force in November 2013 mean that many pension schemes (particularly legal minimum schemes based on banded qualifying earnings) will not require the employer to take pro-rated contributions for members who join or leave part way through a pay reference period (PRP).

Employers who are using pensions which do require pro-ration, may wish to choose a re-enrolment date which coincides with the start of their pay reference period(s) - if possible.

Employers may choose any re-enrolment date in a 6 month window, which spans 3 months either side of the third anniversary of their staging (or previous cyclical re-enrolment) date. For example, an employer who staged on 1 October 2012, may pick any date from 1 July 2015 through to 31 December 2015. If they had both weekly and monthly paid workers and were using tax period based PRPs, they could have chosen Monday 6 July 2015, as it was the PRP start date of both their weekly and monthly payrolls and so no prorating of contributions would be required for those who were re-enrolled.

For more information on re-enrolment visit The Pensions Regulator’s website.