Happy anniversary — auto-enrolment’s third anniversary obligations

Auto-enrolment is now up well and truly up and running, and the obligations that it imposes on employers are on-going. The most notable being, employers must undertake a re-enrolment and re-declaration exercise every three years.

Re-enrolment and re-declaration are legal duties and employers may be fined for non-compliance.

What employers must do

All employers must complete a triennial review where they will need to choose a re-enrolment date, assess and re-enrol certain staff, write to them to confirm their intended actions and complete a re-declaration of compliance.

Re-enrolment duties must be completed approximately three years after the original automatic enrolment staging date.

At the time, employers must complete a re-declaration of compliance to tell the Pensions Regulator (TPR) how you have completed your duties.

Re-enrolment and the re-declaration of compliance are legal duties. With failure to comply within the approved timescale punishable by a fine.

Four basic steps

There are four basic steps to the re-enrolment process but, as always, the ‘devil is in the detail’.

1. Choose a re-enrolment date

The re-enrolment date is the date by which an employer’s staff will have been reassessed for re-enrolment.

There is a six month ‘window’ that starts three months before, and ends three months after, the third anniversary of the original staging date (the relevant dates can be found in the correspondence that will be received from the Pensions Regulator).

2. Assess and re-enrol staff

Staff who must be assessed, with a record the assessment activity held on file:

• All staff who have opted out of the pension scheme;
• Left the pension scheme after the end of the opt-out period;
• Remained in the pension scheme but have chosen to reduce the level of pension contributions to below the minimum level; and
• Who meet the age and earnings criteria to be re-enrolled.

It is possible to leave out staff member who, on the chosen re-enrolment date:

• Are already in the pension scheme used for automatic enrolment;
• Are aged 21 or under;
• Have reached, or passed, state pension age;
• Have not yet met the age and earnings criteria for automatic enrolment; or
• Have had their re-enrolment postponed.

Note: Postponement (whereby it is possible to delay payments for up to 3 months) cannot be used with automatic re-enrolment. If the eligible jobholder criteria have been met by an employee on the automatic re-enrolment date, automatic re-enrolment must take place with effect from that date.

3. Write to staff who have been re-enrolled

Employers must write within six weeks of their re-enrolment date to advise that they are to be reinstated into an auto-enrolment pension scheme. An eligible jobholder then has a one-month period, after automatic re-enrolment, during which they may choose to opt out.

A letter template is available on The Pension Regulator’s website.

4. Complete the re-declaration of compliance

A declaration of compliance must be completed within five months of the third anniversary of the staging date.

This is a legal duty. Whereby, an employer must confirm that they have fulfilled their re-enrolment duties. The re-declaration of compliance must be completed regardless of whether the employer has any staff to re-enrol.

The re-declaration of compliance can be filed online.

Understanding your obligations

It is important that employers understand their on-going obligation under auto-enrolment, as penalties for non-compliance can be high. If you are in any doubt, please contact us.