For small business employers, like yourself, the introduction of auto-enrolment was about much more than meeting your legal obligations, it was also about the welfare of your staff and encouraging them to save for the future.
Now your scheme is in place all employers must complete a triennial review where you will need to choose a re-enrolment date, assess and re-enrol certain staff, write to them to confirm your actions and complete a re-declaration of compliance. These stages are described in more detail below. Re-enrolment duties must be completed approximately three years after your automatic enrolment staging date.
You will also need to 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 and if you don’t complete them in the approved timescale you will be fined.
In addition to the basics of re-enrolment you should also be reviewing if you have fallen behind in any areas or made any mistakes since the original staging date, as well as the ongoing suitability of the existing scheme.
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 - You should do this as soon as possible. Your re-enrolment date is a date chosen by you when you will assess your staff for re-enrolment.
You have a six month ‘window’ from which you can choose a re-enrolment date. This window starts three months before and ends three months after the third anniversary of your automatic enrolment staging date (the relevant dates will be in the correspondence you will receive from the Pensions Regulator).
2. Assess and re-enrol staff - You should do this on your chosen re-enrolment date.
You need to assess staff who have opted out of your pension scheme, left your pension scheme after the end of the opt-out period, stayed in your pension scheme but 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. Records of all this activity must be kept on file.
You can leave out any staff member who, on your chosen re-enrolment date, is already in the pension scheme you use for automatic enrolment, is aged 21 or under, has reached state pension age (SPA) or over, has not yet met the age and earnings criteria for automatic enrolment, or has been postponed. Note – Postponement (whereby you can delay payments for up to 3 months) cannot be used with automatic re-enrolment. If the eligible job-holder criteria are 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 you have re-enrolled - You must do this within six weeks of your re-enrolment date. You must then put staff back into your pension scheme. Having worked out who you are going to re-enrol you must now put them into your pension scheme that is suitable for automatic enrolment and start paying into it.
An eligible jobholder has a one month period after automatic re-enrolment during which they may choose to opt out.
4. Complete your re-declaration of compliance - You must do this within five months of the third anniversary of your staging date
…..And that is just the basic elements of a triennial review (TPR Guidance for Employers – Automatic Re-enrolment document runs to 43 pages).
The scheme itself – As the market has evolved the maximum annual charge allowed (0.75% p.a.) is being significantly undercut by some providers in some case to 0.5% p.a. or less. These more competitive providers often offer a transfer service which means the process of changing providers is very straightforward. You constantly review the costs of your other business services, banking, telephones, insurances, etc. It makes sense to do so with your pension scheme too.
Possible errors or shortfalls – Running a small business is testing enough and it’s easy to miss out on changes to details or to make errors with your workplace pension along the way. It’s very important to check this is not the case at the three year review point. Simple examples might include where someone who has reached the age of 22 in the last 3 years, not included in the scheme at outset but should have been auto-enrolled as of their 22nd birthday. Another might be where someone has had a pay rise or increased their hours in the last 3 years making them eligible for auto-enrolment when previously they were not, and on it goes. If this is the case, FSB Workplace Pensions do offer a Rescue service which can get you back into a legally compliant position with the minimum of fuss.
Payroll compatibility - Payroll compatibility is improving all the time. Some payroll software solutions connect directly to the pension scheme and automatically exchange data with it. This means the payroll administrator only needs to input the data into the payroll system for each payroll run and the pension scheme is automatically updated. As the software makes the calculation, the potential for error is also reduced.
What does the future hold? – Firstly, triennial reviews are here to stay, so let’s try and make them as positive an experience as possible.
In December 2017 the DWP issued a paper entitled ‘Automatic enrolment review 2017: maintaining the momentum’. The review makes a number of recommendations, most of which are seen as being best practice and are already achievable today. Two key recommendations in the report are:
It is true to say that many employers are just starting to appreciate and understand the benefits and risks created by their workplace pension selection. Triennial reviews create an opportunity to improve your Workplace Pension experience, not just provide an onerous administrative burden.
If you want to get this essential activity off your desk, FSB Workplace Pensions offer a triennial review service at a fixed fee of £99 +VAT. Their existing “Premier Service” clients receive the triennial review service as part of their ongoing service package (from £12.50 p.m.+VAT). FSB Workplace Pensions also offer a rescue service if you have got behind or made errors in the administration of your workplace pension.
With expert advice and guidance from a leading provider, it's one of the most popular FSB Member Benefits.