Auto-enrolment for the workplace pension was first introduced in 2012 for larger organisations only with 250 employees or more. Since 2017, auto-enrolment became mandatory for every business with at least one employee (not including director owners of their own limited companies). This means that from the first day you hire your first employee, you must automatically enrol them onto a workplace pension scheme.
To maintain a workplace pension scheme, employees are currently required to contribute a minimum of 5% of their monthly salary to the pension fund. Employers must also contribute to the employees’ fund and are obliged to provide a minimum of 3% of the employee’s monthly salary. However, all employees have the option to opt-out of the workplace pension scheme and can do so by writing to the pension scheme provider.
Even if an employee chooses to opt-out, as an employer you will still have ongoing compliance obligations to fulfil for the workplace pension -
Re-enrolment requires you to put any employees who have previously opted-out of the workplace pension scheme back into it automatically after 3 years. To do this correctly you will need to follow the steps below:
- When completing re-enrolment for the first time, it is usually advised that you should choose the 3 year anniversary of your staging date. A staging date is the date that the Government and The Pensions Regulator say that should have a compliant pension scheme set up by. If you need to find this out you should have your PAYE reference of your company to hand and you can use The Pension Regulator’s re-enrolment date calculator. However, your re-enrolment date can be any date that falls within a 6 month timeframe of your staging date.
- You need to identify relevant staff who are eligible to be re-enrolled, re-enrol them on your chosen re-enrolment date, and start contributing to their pension scheme from that date also.
- You must write to each employee individually who has been re-enrolled within 6 weeks of their re-enrolment date, to explain that re-enrolment applies to them and that this involves them being put back in a workplace pension scheme. Then the minimum contribution will automatically be taken from their monthly salary and put into the scheme. If they wish to opt-out they must do so again in writing to the pension provider.
Re-declaration is the second part of the process and requires you to confirm that you have taken all necessary steps to comply with the workplace pension obligations.
- This must be done within 5 months of the 3 year anniversary of your company’s staging date
- You are not allowed to postpone this responsibility in any way
- You need to make sure that you provide The Pension Regulator with your correct contact details
- You must complete re-declaration even where you have no eligible staff that require re-enrolling back onto a workplace pension scheme
Re-enrolment and re-declaration must be carried out every 3 years and is part of an employer’s broader payroll duties. For support on payroll for your employees please see our payroll page.