Since being introduced in October 2012, auto-enrolment has transformed the way most employees save for retirement. It’s brought workplace pension participation levels to record highs, passing the 10 million milestone in February 2019.
If you employ staff who qualify for auto-enrolment, you’ll already be familiar with the way the scheme works. Anyone who earns more than £10,000 a year and is aged between 22 and state pension age must be enrolled in a workplace pension scheme that meets certain criteria, and you and the employee both need to make minimum contributions towards it.
But there are other tasks for employers to complete, and one of those is re-enrolment: the requirement to assess whether staff qualify for auto-enrolment every three years, and to put eligible staff back into a qualifying scheme if they aren’t already in one.
The way the initial staging dates for auto-enrolment were set up means this year and next, many employers will be reaching the three-year anniversary of the date they started, and will need to begin the re-enrolment process.
How to re-enrol staff
Your re-enrolment date will be three years after your staging date, unless you choose to delay it.
The first step is to assess any staff who have left your pension scheme or reduced their contributions. Do they meet the qualifying criteria for auto-enrolment?
If they do, you need to ensure they are put into a qualifying workplace pension scheme, and write to them to inform them of this. Both must be done within six weeks of your re-enrolment date.
Even if you don’t need to re-enrol anyone, you still need to complete a re-declaration of compliance form and send it to The Pensions Regulator. This must be done within five months of your re-enrolment date.
Exceptions to re-enrolment
There are some cases in which re-enrolment isn’t required. You can choose whether or not to re-enrol any employee who:
- left the scheme or stopped making contributions less than 12 months before the re-enrolment date
- has already given notice to end their employment with you
- has been given a notice of dismissal
- holds the office of director
- has protection from tax charges on their pension savings
- is a partner in the company.
If you’re not sure whether or not an exception applies to a member of staff, talk to us for a more detailed explanation.
Keeping up with auto-enrolment
Re-enrolment isn’t the only thing to consider as part of your auto-enrolment duties.
You also need to consistently monitor the ages and earnings of staff to check whether they qualify, manage requests to leave or join the scheme, and keep records.
All the while, make sure you maintain contributions to employees’ pensions that meet the minimum required rates.
Minimum contribution rates
The following minimum contribution rates apply from 6 April 2019 onwards.
The minimum amounts are taken as a percentage of the employees qualifying earnings. These are their earnings between £6,136 and £50,000 in 2019/20.
So, if your employee receives an annual salary of £20,000 in 2019/20, their qualifying earnings would come to £13,864 (£20,000 – £6,136).
That means their total pension contributions for the year, at the combined minimum of 8%, would come to £1,109.12.
It’s also worth noting that while the employer contribution rate and combined contribution rate are set at compulsory minimum levels, the employee rate can change as long as the combined total is still 8% or more.
For example, if you decided to contribute 4% of an employee’s qualifying earnings to their pension, they would only need to put in another 4% themselves to make it up to the minimum.
Get in touch
As part of our outsourced payroll service, we can manage these tasks and guide you through any areas you’re unsure about.
Talk to us for help with re-enrolment and workplace pensions.