Whilst the press, regulators and the pensions industry are focused on the 1.8m small and micro employers yet to stage we’re also aware of how many of our larger customers are coming up to their first re-enrolment, or at least starting to plan for it.
You might be thinking that having staged, re-enrolment will simply be a repeat exercise. Sadly, there are quite a few legislative traps to consider. But first of all a definition is useful. There are two types of re-enrolment: cyclical and immediate. This article deals with cyclical re-enrolment that happens three-yearly. Immediate re-enrolment is what has to happen if a pension scheme ceases to be classed as a qualifying scheme such that all the eligible jobholders need to be made members of a new qualifying scheme immediately.
Cyclical re-enrolment
So to cyclical re-enrolment. First you need to pick the same Cyclical Auto Re-enrolment Date or CARD for the whole workforce, regardless of their pay frequency. There is some flexibility in the CARD though. It can be any time within a six month window that falls up to three months either side of the original staging date (not any postponement date that was chosen).
You must re-declare compliance to the Regulator within five months of the third anniversary of your staging date.
For example:
- If you staged on 1 June 2014,
- Your cyclical re-enrolment window will start on 1st March 2017 and will end on 30th September 2017.
- Your re-declaration of compliance is due within five months of the third anniversary of staging, therefore the deadline for this is 30th November 2017.
Use of postponement
The next consideration is that postponement cannot be used in the pay reference period in which the CARD falls for individuals who are to be re-enrolled into a pension scheme due to cyclical re-enrolment. This may influence what CARD is chosen if the employer needs to consider the cost impact of auto-enrolling eligible jobholders who have had a one-off spike in earnings, their 22nd birthday or are seasonal workers. Equally some pension providers cannot handle part-month contributions, so insist on a default postponement to the start of a full week or month for mid-period starters. Some providers may also struggle to reactivate membership for those who had been members before a cessation.
The group of workers to be assessed for re-enrolment is fully defined by The Pension Regulator. Employees who may be included are:
- Eligible Jobholder who has an AE date with the employer was auto enrolled and opted out,
- A jobholder who was previously a member of the QS, who then opted out or ceased membership and who since triggered automatic enrolment through a status as Eligible Jobholder.
- A worker who was already in a QS at the staging date and was assessed as an EJH at some point during their pension membership, who then ceased membership.
The Employer has options to exclude workers from the assessment who opted out in the last 12 months, or where certain conditions apply, ie have a date of leaving on file, or have pension tax protection.
Any worker who is part of this CARD assessment and is non-eligible at that point need not be reconsidered until the next CARD unless they voluntary opt-in or join.
After the CARD assessment there will be the normal cycle of letters to be issued, files to be uploaded and opt-outs and refunds to be processed. The Re-declaration of Compliance will also be due to The Pensions Regulator.
So there are many key considerations ahead of re-enrolment and that pre-supposes you’re happy with the scheme you chose first time around, more of that another time perhaps.