Re-enrolment and switching your pension provider
If you're thinking about switching your pension provider, whether its because you are dissatisfied with your current provider or whether its because you're approaching automatic re-enrolment and your current provider is no longer the right fit for your company, then Smart Pension is the obvious choice.
Below we talk a little more about re-enrolment and its four-step process as well as tell you how you can transfer over from your existing auto enrolment pension provider to Smart Pension.
If, however, you want to skip ahead and start the process of switching over from your auto enrolment pension provider to Smart Pension, click the button below. Switch to Smart Pension
What is automatic re-enrolment?
Automatic Re-enrolment is a cyclical process that happens every three years (approximately three years after your automatic enrolment staging date/duties start date) whereby an employer must re-enrol certain eligible employees back into an automatic enrolment pension scheme.
If an employee has chosen to opt out of the scheme or ceased membership, the employer has the duty to re-assess them during the re-enrolment process. If these employees are deemed eligible, they must be re-enrolled back into the workplace scheme.
Preparing for re-enrolment
During the re-enrolment process, many employers will look to carry out a general review of the scheme and to assess whether their current provider still meets the needs of the company and most importantly, its members. Some key areas that the employer might want to consider when preparing and planning for re-enrolment are:
- Payroll systems. During the three years since the launch of the scheme, payroll and payroll integrations have come along way. Questions should be asked around the software currently being used e.g. Does it do the job(s) it needs to? Does it work smoothly with the pension scheme in question? Are there better alternatives available?
- Choosing a re-enrolment date. An employer must elect a re-enrolment date as they approach the third anniversary of their staging date. The date itself can fall three months either side of the staging date, giving employers a flexible six month window e.g. employers who staged on 1st May 2013 can choose to re-enrol on any day between 1st February and 31st August 2016.
Since the re-enrolment date can be chosen by the employer within a six-month window, it might be helpful to align this date with the start of a payroll period. Successive re-enrolment dates will have a six-month window based on the last re-enrolment date.
- Re-declaration to The Pensions Regulator. Following re-enrolment, it is the responsibility of all employers to submit a re-declaration of compliance within five months of their staging date anniversary.
- Data cleansing and integrity. It is best practice during this re-enrolment exercise to carry out some data cleansing. Incorrect or inconsistent data can develop over time such as changes in an employee's address, email address and surname being some of the more common errors. This re-enrolment exercise is an ideal opportunity to review the data on record and carry out some basic checks to ensure the scheme data is as accurate and up to date as possible.
- Suitability. Equally as important is a general review of the scheme itself. Has the service that has been delivered by your pension provider been of a sufficient standard and quality over the past few years? Have the investments underpinning the scheme performed as well as hoped / in line with other pension providers? These are just two of the basic questions an employer should ask themselves.
Good scheme governance means that employers, in conjunction with their advisers, should really be reviewing their pension scheme periodically – i.e. every three years. A three year cycle also coincides with the 3 year period during which a member may elect to 'opt out' of their employers pension scheme.
How do I re-enrol?
See below for a step-by-step employer's guide to the automatic re-enrolment process:
1. Select your re-enrolment date
Choose your re-enrolment date from within a six-month window as you approach the third anniversary of automatic enrolment staging date/duties start date. The date itself can fall three months either side of the staging date/duties start date e.g. employers who staged on 1st May 2014 can choose to re-enrol on any day between 1st February and 31st August 2017.
2. Re-assess certain employees
You will need to re-assess certain employees to determine if you are required to put them back into your workplace pension scheme e.g.
- Those who have left the scheme through opt out
- Those that have ceased their membership before the re-enrolment date
- Those that have stayed in the pension scheme but have chosen to reduce their pension contributions to below the minimum required levels of automatic enrolment
- Those that have passed the statutory retirement age (but kept on working) in the last three years
- Those that have reached the age of 22 in that period
- Those that may have changed from working part-time to full-time and vice versa.
- Mandatory assessments: Employers must re-assess all employees who had been enrolled into a scheme and then opted out or ceased membership more than 12 months before the chosen re-enrolment date.
- Optional assessments: Employers can choose to re-assess all employees who had been enrolled into a scheme and then opted out or ceased membership within 12 months of the chosen re-enrolment date.
- Employers may choose to not re-assess all eligible jobholders who have given their notice to end their employment or have been given notice of dismissal by the employer.
3. Inform employees who have been re-assessed about the re-enrolment
As part of your auto enrolment responsibilities, you will need to notify your employees about re-enrolment and that you've enrolled them back into the workplace pension scheme. Smart Pension will automatically inform your employees of their re-enrolment if you have provided email addresses for your employees. This must be done within six weeks of your chosen re-enrolment date.
Employees that have been automatcially re-enrolled can still choose to opt out within one month of the re-enrolment date or leave the scheme after the one month opt out period is over.
4. Complete and submit your re-declaration of compliance
You will need to inform The Pensions Regulator that you've met your legal duties for re-enrolment and that your workplace pension is still compliant by completing your re-declaration of compliance within five months of the third anniversary of your staging date/duties start date. You'll need to do this even if you have no staff to re-enrol into the workplace pension scheme.
Both automatic re-enrolment and re-declaration of compliance are part of an employer's ongoing legal duties and must be completed every three years. Failing to do either will mean that you could be subject to a fine from The Pensions Regulator.