Under the UK pensions act of 2008, all business employers need to enrol their staff into a pension scheme. If you have members who have opted out, they will need to be periodically re-enroled.
It’s vital to understand this legislation, and how it affects your business and thus avoid any penalties or fines.
As an employer workplace, pensions are essential to understand – especially your legal obligations – to avoid costly penalties and fines.
So let’s understand re-enrolment and make sure you’re not going to get caught out by it.
What is pension re-enrolment?
When an employer has to automatically re-enrol their staff into their current workplace pension, this is known as pension re-enrolment.
All eligible employees must be re-enrolled and then given the option to opt-out afterwards. This process runs for three years, before eventually re-enrolment and opting out again.
What is a pension staging date?
A pension staging date is the latest date at which a company must meet this requirement to offer an automated pension scheme.
Before 2012 it used to be up to staff to decide whether they wanted to join a workplace pension scheme – but this is now automated since becoming a mandatory task for employers, as set by the Pensions Regulator.
A staging date is determined by the number of staff they employed currently listed on the payroll.
The date on which your business is enrolled will be the staging date, with a six-month window (three months on either side) allowed for the re-enrolment process to be completed.
This date is usually around the original re-enrolment date but could also be a predetermined date by a business leader or director.
This is usually marked on a piece of paperwork from the Pensions Regulator – if lost, you’ll need to get in touch with them to find it out.
So who needs to be re-enrolled?
The employees who qualify for automatic pension re-enrollment are:
- between 22 and the state pension age
- earning at least £10,000 annually
If a member of staff is leaving or has other extenuating circumstances, they do not have to be re-enroled, but this is on a case by case basis.
What happens after re-enrolment?
Employee payments must be deducted throughout the payroll process after re-enrolment, and employers must also start paying contributions.
In addition, the Pensions Regulator must receive a completed re-declaration of compliance.
Re-declaration of compliance
Within five months following the first third anniversary of the staging date, you must submit a new declaration of compliance for the first re-enrolment process to the Pensions Regulator.
The re-declaration of compliance is required on subsequent re-enrolment dates and is due every three years on the anniversary of the previous re-enrolment date.
Re-declaration of compliance is required even if no one needs to be re-enrolled in the workplace pension plan. Business fines and other penalties could result from failing to submit the information on time.
You can submit the re-declaration of compliance via the Pension Regulator.
The information required is as follows:
- the reference number for your workplace pension scheme
- name and address of the pension provider
- the type of pension scheme used
- your re-enrolment date
- number of employees to be re-enrolled
- number of employees in total
- number of employees already enrolled on a workplace pension.
What if my staff want to opt-out?
All staff have to be re-enroled, even if they have informed the employer that they still want to opt out.
Legally, an employer must re-enrol everyone and then give them the option to opt out again after three years.
After every re-enrolment, you’ll need to let your employees know – they then have a month to decide if they want to opt out. If a pension contribution is deducted during this time, they’ll be entitled to a refund.
Your staff can opt out of their pension at any time, with both you and the employee in question not making any more contributions.
If this happens outside of the one month of enrolment, they won’t get a refund. Their pension pot will only be accessible when they retire or if they wish to move it to a different account.
If you have any questions about pension re-enrolment, get in touch with us today.