Three years is a long time in business and particularly in the SME (small to medium enterprise) world, where challenges have come thick and fast - notably the impact of the oil crises in this part of North East Scotland.
Although automatic enrolment has been with us since 2012, it was only by 2015 that most small to medium sized businesses were required to implement their qualifying workplace pension scheme for staff.
So, those companies who staged middle to late 2015 are now required to complete the triennial re-enrolment process as part of their employers’ duties.
It is clear from conversations with some of my clients who are in this position that the options and duties that arise with this exercise have not necessarily been fully recognised and - with the pressure of day-to-day business operations - the completion of this process has not been given the priority it should receive.
In simple terms, the triennial re-enrolment process requires employers to re-enrol eligible jobholders who have previously decided to opt out of or elected to leave pension provision.
However, as with all regulatory requirements, while the concept is straight forward, the practical application is a little more challenging.
- While triennial re-enrolment can be completed on the three-year anniversary, employers can also - if preferred - select a date three months either side. This will be the re-enrolment date and the centre of your six-month period at the next re-enrolment exercise in the future. So, if the requirement has crept up on you or the anniversary clashes with other business priorities, the date can be moved within this time line.
- Not all eligible jobholders need to be re-enrolled and there are exemptions that might apply. For example, if employees have only opted out within the last 12 months, then they can be deferred until the next process in three years’ time.
- Not all exemptions are automatic, and, in some circumstances, the employer is given the choice whether to comply with the exception.
- Employers are required - as with the original scheme staging - to give statutory written communication to staff informing them of their rights, what is happening and when it will commence.
- This is a re-enrolment process. As such, you do not re-enrol jobholders who have yet to reach their normal enrolment date. These will be assessed and enrolled at the appropriate date. You are legally required to re-declare your compliance – even if you have no employees to re-enrol. In some instances, there is a possible requirement to complete re-certification.
The most common question I get asked – in a situation where the jobholder has previously elected to opt out – is: ‘Can they just decide not to go in and not have the contributions deducted?’
The answer is emphatically ‘No’. Re-enrolment must occur as, in a simple comparison with the game of cricket, you cannot be out until you have been in.
As with all regulatory employers’ duties, there are complexities and failure to correctly implement things can lead to financial penalties from The Pensions Regulator.
So, despite very real day-to-day business pressures, this a matter which needs to be given serious attention.
If in any doubt, get advice/guidance from your employee benefit consultant and/or payroll provider.