Plan ahead and be prepared to re-enrol employees in your workplace pension plan
It pays to plan ahead – this is one of the most valuable pieces of advice we can offer to our clients as they seek support with tax, business start-ups and pension planning.
The same applies when it comes to auto-enrolment in workplace pensions and, when the time comes, re-enrolment.
You may think that after the initial work in establishing a workplace pension, enrolling your employees, arranging to deduct their contributions through payroll and setting up your payments contributions that you have fulfilled your obligation.
However, every three years eligible workers who are not part of the scheme will need to be enlisted, unless they again choose to opt out – although this could mean they are unprepared for retirement so it may be worth sharing our 12 tips for preparing for retirement.
The re-enrolment process should be less onerous than the original implementation of the auto-enrolment as it only applies to those who are not currently paying in.
Planning ahead will help ensure you are prepared for this because once the date rolls around you will have just six weeks to complete the required tasks.
If you need help our team here at Jacobs Allen Chartered Accountants and Chartered Tax Advisers are available to guide you through the process.
As a guide, the re-enrolment date can be three months either side of the third anniversary of your original staging date and the specific date is chosen by you.
This six-month window means you can avoid busy periods for your business or try to align the dates with other financial events such as year end.
We suggest our clients let their pension provider know their re-enrolment date is approaching, particularly if they are likely to re-enrol a significant number of staff.
It is also vital that employers make sure payroll systems are able to handle any changes. Re-enrolment is also a good time to look at whether your existing pension scheme meets your needs as your business may have changed considerably since you started auto-enrolment.
Here we break down the re-enrolment process to help you, as an employer, understand what is required of you.
- Identify your staff – those who have opted out or left the scheme and those who are paying less than the minimum contributions should be highlighted
- Assess staff – you need to assess those who have been identified to see if they meet the criteria for auto-enrolment. This is the same process you went through when starting auto-enrolment and generally those aged 22 and over who earn more than £10,000 a year are eligible
- Re-enrol staff – add those eligible to your pension scheme and start making contributions straight away. Currently the minimum contribution for employers is 1% but this will increase to 2% next April and 3% from 2019/20
- Inform staff – you have six weeks from your re-enrollment date to write to any staff you have re-enrolled explaining that they have been added. Tip – The Pensions Regulator and some pension providers supply template letters to help you communicate these changes. They then have a month to choose whether to opt out or not.
- Re-declaration of compliance – visit The Pensions Regulator website to confirm you have completed the process
It is worth noting that you will need to complete step five even if you do not have any staff to re-enrol. When you log on you will be asked for your PAYE scheme reference, details about your pension scheme and the number of staff you re-enrolled.
If you don’t have this to hand you can save your progress and update when you have all the information needed.
Officially this must be completed five calendar months after the third anniversary of your original staging date but we recommend you do it as soon as possible to avoid any penalties. This may be the final step but, as with all financial matters, it is important to update your records to prove you have fulfilled your obligation.
Your records should show employee information including basic personal details, national insurance number, gross qualifying earnings, auto-enrollment date, opt-in or opt-out notices plus pension scheme information including your employer pension scheme reference, scheme name and address.
In general, you will need to keep records for six years but information related to opt-outs only needs to be kept for four years.