Whilst many SME’s are only now starting to get their head around the concept of Auto Enrolment as they work towards their staging dates over the next 2 years, for larger businesses which staged nearly 3 years ago, the time is coming when they need to start to plan for the re-enrolment process.
What is Automatic Re-enrolment?
Automatic re-enrolment occurs every three years after staging and is in essence similar to the process that an employer carries out on their staging date or deferral date if they postponed auto enrolment.
The employer must re-enrol certain staff that are not already active members of the scheme into the workplace pension scheme that was set up for automatic enrolment.
As with the original Auto Enrolment duties all employees should receive the Statutory Auto Enrolment letters in line with the Pensions Regulator compliance. These letters provide employees who have been re-enrolled the information required to opt out of the scheme should they wish.
Re-enrolment also requires the employer to complete another declaration of compliance within five calendar months of the third anniversary of their staging date.
Details of the Automatic Re-enrolment process can be found on the HMRC’s website
Example of automatic re-enrolment in practice
The following example demonstrates a simple automatic re-enrolment process:
An employer with 10 employees had an Auto Enrolment staging date of 01/08/2013.
At staging all the employees were assessed and 8 had earnings that qualified them for the AE pension and were automatically enrolled.
In the second month three of the employees decided to opt out of the pension scheme, leaving 5 enrolled employees, 3 employees that had opted out and 2 non-eligible employees.
Assuming all things remain the same, the 5 enrolled employees will continue to pay into the AE scheme, the 3 opted out employees will not pay contributions and the 2 non eligible employees will be continually assessed every time they are paid in case their circumstances change and they become eligible (in which case they would be automatically enrolled).
On the Auto Re-enrolment date 01/08/2016 (the 3 year anniversary of the employers staging date) the 3 employees who previously opted out and the 2 non eligible employees will all be assessed under the Auto Enrolment criteria.
Again assuming everything else remained the same this would result in the 3 employees who had previously opted out being re-enrolled.
How Qtac Can Help
The lead up to your re-enrolment date is a perfect time to stand back and review the impact that Auto Enrolment has had on payroll processes.
Assessing the impact on processing times and the performance of existing payroll software during staging and over the past 3 years can help to identify any changes that might be needed prior to your re-enrolment date.
Qtac’s Payroll Software has a full suite of auto enrolment features which help businesses to manage the re-enrolment process smoothly by assessing and enrolling eligible employees and creating employee letters in line with the 3 year anniversary of the staging date.
If you are struggling to manage auto enrolment effectively through your existing software or if it doesn’t enable you to easily manage the process then speak to our team on 0117 9353500 for more information or to arrange a free demo of our software.
Alternatively, if you feel, having completed auto enrolment for the past 3 years, you would prefer to pass over your payroll responsibility to a payroll provider our outsourced payroll services could be a great benefit. Get in touch to find out more.