Re-enrolment: Pitfalls your scheme should look out for

The legislation allows employers to choose a re-enrolment date within a six-month window. Generally, this window starts three months before the third anniversary of the employer’s staging date and ends three months after, on the last day of the third month after the staging date.

Using one of the Pensions Regulator’s examples, an employer with a staging date of October 1 2015 has a re-enrolment window of July 1 2018 to December 31 2018.

There is no discretion to allow a re-enrolment date on the first day of the following month, here being January 1 2019. Employers need to ensure they do not have difficulties using a date not at the start of a month if they want to use a date within the final month of the window.

Postponement

Generally, employers can postpone an employee’s auto-enrolment date by up to three months. This is not available for re-enrolment. The automatic re-enrolment date used must be within the six-month window and cannot be postponed any further.

Where an employer has postponed a new employee’s automatic enrolment date and this falls after the automatic re-enrolment date, the postponement still stands. There is no obligation to enrol these new employees on the automatic re-enrolment date.

Employees with tax protections

There is no longer an obligation to automatically enrol or re-enrol employees with either primary, enhanced, fixed (2012 and 2014) and individual protection 2014.

Instead, employers may choose whether or not to automatically re-enrol these employees where they have reasonable grounds to believe that the employees have one of these tax protections.

Employers should consider whether or not to automatically re-enrol these employees. If they do automatically re-enrol them, they need to consider what communications are appropriate with these employees about the need to opt out to keep their protection.

If an employer decides not to automatically re-enrol these employees, they need to consider what evidence they will require of the employees’ tax protection and how they will get this.

Currently there is no discretion to exclude those employees from re-enrolment who will have one of the 2016 tax protections.

The government has recognised that it needs to extend the existing discretion to these new protections but so far has not been able to do so. They intend to introduce regulations at the earliest opportunity but cannot do so before the Finance Act 2016 becomes law.

Therefore, technically, there is still an obligation to automatically re-enrol these employees. Again employers should consider what communications are appropriate with these employees so that they exercise their right to opt out and preserve their ability to claim these protections where needed.

Other exceptions to the automatic re-enrolment obligations

There are other exceptions where employers can decide whether or not to automatically re-enrol employees, the main ones being:

• An employee who has chosen to stop being a member of the relevant scheme during the 12 months before the re-enrolment date

• An employee who is in their notice period, where the employer or employee has given notice before the end of six weeks beginning with the automatic re-enrolment date.

Compliance declaration

Once the employer has completed the automatic re-enrolment process, they need to redeclare their compliance with the regulator. There were previously two deadlines for redeclaration of compliance.

The deadlines differed for employers who had any employees to automatically re-enrol and those whose employees were already all in a qualifying scheme.

Helpfully, from April 6 2016 a single deadline applies. Employers now have to redeclare their compliance within five months of the third anniversary of their staging date. 

Sarah Parkin is managing associate at law firm Linklaters