Auto enrolment, where all eligible employees of a business are auto enrolled into an workplace pension scheme has been ongoing since 2012. With the country's largest businesses now largely dealt with, it has been an unqualified success, with an average opt-out rate of just 6% amongst FTSE 350 firms, and an overall opt-out rate of less than 10% which makes it the most popular auto enrolment process to be implemented in any country.
All the talk in the press has been about the next stage of auto enrolment, which will see the millions of small and micro businesses go through the auto enrolment process. Despite high profile campaigns on TV starring Theo Paphitis of Dragons Den, not all companies of this size are aware of their responsibilities under auto enrolment, which might not be surprising when many of the 'employers' covered by this legislation are families who employ nannies and the elderly who employ carers. But with all this talk of auto enrolment, very little is being talked about re-enrolment.
What is re-enrolment?
Re-enrolment, or automatic re-enrolment to give it its proper title is the process that occurs every three years on the anniversary of an employer's staging date. It is essentially a repeat of the auto enrolment process and they must re-enrol any staff who are eligible into their workplace pension scheme who aren't in it already.
Considerations companies need to make when automatically re-enrolling:
- Payroll systems It is important that companies ensure that their payroll and software systems are up to the challenge of re-enrolment. Many may not be, so it is important that employers talk to their providers about it.
- Date integrity Any inconsistent or incorrect data that was used in the auto enrolment process has the opportunity to become further entrenched the process when the re-enrolment process begins. This could lead to non compliance issues so it is vital that companies ensure their data is as up-to-date and factually correct as it can possibly be.
- Suitability On a more positive note, re-enrolment gives businesses a chance to review their pension scheme arrangements and change them if necessary. What was suitable three years ago may not be suitable now.
Businesses should be preparing for re-enrolment now, even if they have not yet begun the initial auto enrolment process. Doing so will lead to an easier time overall and significant costs can be saved too. Rather than treating re-enrolment as a paper exercise that has to be done, employers should engage with it in a positive way and use it as an opportunity to review their entire pensions arrangements.