Now that you’ve got to grips with auto-enrolment, prepare for auto re-enrolment

18 August 2016

Auto-enrolment, the government initiative which made it compulsory for all businesses to enrol their employees in a pension scheme, celebrated its third anniversary last October.

Whilst most employers have by this point got to grips with what they need to do to comply with auto-enrolment, those businesses that were some of the first to implement the initiative face a new challenge three years on: the first phase of automatic re-enrolment.

Occurring on a three-year cycle, re-enrolment makes sure that eligible employees who chose not to opt in during the previous round of auto-enrolment are reminded of the benefits of being part of the pension scheme and have the chance to opt in again. This may seem a bit of a potential headache for businesses and it is a reminder for those only just staging now.

Thankfully the government has recognised this, having amended the legislation for auto-enrolment to lighten the load for employers. These amendments mean that it is not necessary to re-enrol any employees preparing to leave the business, or those who opted out less than twelve months before the re-enrolment process. The government has also allowed those with tax protected status to be prevented from making any contributions that would result in them having to pay a hefty tax charge.

Even with these amendments, there are still challenges for businesses to overcome when it comes to re-enrolment. It has been suggested that many existing payroll computer packages may not yet be ready, leading to unavoidable software upgrades that may require additional cost and staff training to implement.

It’s also important for employers to make sure they carry out the process at the right time. Businesses have a six month window – three months either side of their original staging date – in which to carry out re-enrolment. It’s important, however, not to confuse the specific date of auto-enrolment with the staging date.

Yet another pitfall is the re-enrolment of employees without them being aware of the process. Businesses are not obliged to write to workers about re-enrolling, but it’s highly advised that they do. Keeping employees informed about their options, what will happen if they don’t do anything, and what they need to do to opt out again, will help keep avoidable frustration and confusion to a minimum.

If you are looking at auto enrolment in your business we have a range of solutions available to help you and please speak to your usual contact to find out more.

  • For further information please contact:

    Tony Hawes

    Chartered Financial Planner, Commercial, Yeovil

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