A principle of the automatic enrolment duties is that an employer must ensure that job holders who satisfy the eligibility conditions are included in a qualifying workplace pension scheme.
In addition, they must re-enrol back into the scheme any eligible employees who have previously left it.
The process of putting people back in happens on a three-yearly basis and is known as ‘cyclical automatic re-enrolment’. As with auto-enrolment, the responsibility for ensuring this happens falls on the employer.
The process of automatic re-enrolment is similar to auto-enrolment, except there can be no deferral. Once re-enrolled, these employees have the same ability as before to opt out or subsequently leave the scheme.
When does this happen?
Cyclical re-enrolment takes place on a date, chosen by the employer, which falls in the six month window centred on the third anniversary of their original staging date. For example, an employer whose original staging date was 1 July 2014 could choose any date from 1 April 2017 to 30 September 2017, according to whatever date is most convenient to them.
There is no requirement for the date to be the first of a month but only a single date can be chosen. This means it is not possible to have one convenient date at the start of a pay period for monthly paid employees and a different convenient date at the start of a pay period for weekly paid employees.
Which employees are affected?
- The employee has previously had an auto-enrolment date but they have since opted out or left the scheme or the scheme is no longer qualifying because contributions for them are below the minimum required under the legislation.
- The employee is aged 22 or older.
- The employee is below their state pension age.
- The gross pay for the employee in that pay period is greater than the equivalent of £10,000 a year.
An employer is able to exclude employees who meet one or more of the following criteria:
- In the previous twelve months, the employee has opted out, left the scheme of their own volition or whose membership of the scheme has become non-qualifying.
- The employee has given written notice that they are leaving the employer.
- The employee has protection from excess tax charges for lifetime allowance purposes on their pension savings.
Re-declaration of compliance
After the original staging date, the employer was required to submit a declaration of compliance (originally ‘registration’) to the Pensions Regulator confirming their compliance with the automatic enrolment duties and advising various details about the scheme and employee numbers. There is a similar requirement following cyclical re-enrolment.
The deadline for submission of a re-declaration of compliance is five months after the third anniversary of the original staging date. Details of the original submission were confirmed to employers by the Regulator and are available to the employer through the Regulator’s ‘declaration of compliance’ portal.
Employers approaching re-enrolment need to:
- choose their re-enrolment date
- assess their employees to establish who qualifies for automatic re-enrolment
- decide whether to include or exclude the allowable exceptions
- re-enrol the appropriate employees
- submit the re-declaration within five months after the third anniversary of the original staging date
After cyclical automatic re-enrolment
Once cyclical automatic re-enrolment has been completed, an employer will continue with their normal ongoing pension scheme and automatic enrolment responsibilities.
At the next cyclical automatic re-enrolment date, which is again a date of the employer’s choice; from the six month window spanning three months either side of the third anniversary of their last cyclical automatic re-enrolment date, the re-enrolment exercise will need to be completed.
This cycle is expected to continue into the future to try to help every employee secure an adequate income in retirement.