You are probably aware of your legal requirement to enrol your staff into a workplace pension scheme. However, you also need to be aware of your legal obligations regarding re-enrolment. There are two types of re-enrolment – cyclical and immediate. Therefore you, any payroll provider or other third party who administers your workplace pension, will need to have systems in place to ensure that both cyclical and immediate re-enrolment is carried out.
Cyclical re-enrolment is something you need to carry out once every three years. Your first task is to decide exactly when your first cyclical re-enrolment will be carried out. The date you choose must be within a six-month period that runs for three months either side of the third anniversary of your staging date. So, if your staging date was January 1 2015, your first cyclical re-enrolment exercise would need to be carried out between October 1 2017 and April 1 2018.
For your second and subsequent cyclical re-enrolments, you must choose a date that falls within three months of the third anniversary of the last cyclical re-enrolment. In the above example, if you carried out cyclical re-enrolment for the first time on February 1 2018, then the second re-enrolment exercise could be conducted anytime between November 1 2010 and May 1 2021.
Once the time comes for you to carry out cyclical re-enrolment, you need to identify any employees who, at any time within the previous 12 months:
- Opted out of your workplace pension scheme
- Reduced their contributions to less than the minimum requirement, which is currently 0.8% of qualifying earnings
- Ceased making contributions entirely
If any employees who chose to do this are still employed by you, and continue to meet the eligibility criteria for a workplace pension, then they must be re-enrolled.
Cyclical re-enrolment is not necessary for any employees who meet at least one of the following criteria:
- Are aged 21 or under
- Have reached state pension age
- Earn £10,000 or less per year
- Are under notice to leave your company within a six-week period following the re-enrolment date
When you have completed each cyclical re-enrolment exercise, you have one more important obligation. Within five months of completing the re-enrolment you must notify The Pensions Regulator by completing a ‘re-declaration of compliance’.
Whereas cyclical re-enrolment is something you only need to carry out once every three years, immediate re-enrolment is something you need to do on a continuous basis.
If you become aware that an employee, who may previously have become ineligible for your workplace pension scheme, is now eligible again, then you must immediately restore them to membership of the scheme.
Situations where a need for immediate re-enrolment may arise include:
- An employee’s earnings had previously fallen to £10,000 per year or less, but are now once again higher than £10,000
- An employee who had gone to work for you overseas now returns to the UK
- An employee who had given notice to resign or retire decides to withdraw their notice and carry on working for you
Employees who have been re-enrolled then have one month to opt out of the scheme.