Pension Re-Enrolment: A Step-by-Step Guide for Businesses

Pension Re-Enrolment: A Step-by-Step Guide for Businesses

Employers must comply with UK law by re-enrolling eligible employees into their automatic enrolment pension scheme. This is an obligation whether employees’ wish to be re-enrolled or not. In this guide, we’ll walk you through adhering to the pension re-enrolment regulations.

What Does Pension Re-Enrolment Entail?

It’s crucial to note that every UK business is required to have a pension scheme for their employees, irrespective of the employees’ inclination to join.

Similarly, every three years, businesses need to re-enrol any eligible employees who exited the workplace pension back into it (details about eligibility are provided below).

It is mandatory to submit a re-declaration of compliance to The Pension Regulator, highlighting that the business has adhered to the set obligations, irrespective of whether the employees made a formal request.

Neglecting these responsibilities, both re-enrolment and re-declaration, can lead to hefty fines, potentially up to a daily rate of £10,000.

Who Qualifies for Automatic Re-Enrolment?

It’s essential to re-enrol qualifying employees back into the pension scheme. Here’s a snapshot of the criteria for eligibility:

• Age bracket: 22 to State pension age
• Annual earnings: Minimum of £10,000
• Previously opted-out of the workplace pension scheme

Those who fit the criteria must be re-enrolled, even if they don’t want to re-join. Instead, employees will have to manually opt-out again. However, certain conditions exclude employees from being needed to be re-enrolled:

• The employee stopped workplace pension contributions 12 months prior to re-enrolment
• The employee recently resigned or received notice of termination of employment
• They have tax protection on their pension savings (i.e. they have exceeded the lifetime allowance)
• Director or partner status in a Limited Liability Partnership (LLP)
• Received a lump sum from another pension within 12 months before re-enrolment

If any of these apply, the re-enrolment process is unnecessary, but a re-declaration to The Pension Regulator is still required.

Determining Your Pension Re-Enrolment Date

Employers should note that their initial re-enrolment is three years post their original staging or commencement date. However, it’s not an exact day but spans a six month window. This grants some flexibility to choose any date between three months before or after your staging date.

To determine your specific staging date, you can find your dates for re-enrolment via The Pension Regulator with your letter code and PAYE reference.

The date you choose for re-enrolment must include all employees eligible within your 6-month window. On this date, you’ll need to start making contributions to their pension again until they opt-out.

You can’t postpone your re-enrolment date beyond your 6-month window. Ideally, choosing a re-enrolment date that aligns with your payroll is best as this will enable you to match the start of your pay period.

Steps to Process Re-Enrolment

Re-enrolment mirrors the original auto-enrolment process. Here’s a summary:

1. Identify suitable employees.
2. Re-enrol them into your pension scheme.
3. Notify every employee about the re-enrolment.
4. Declare adherence to The Pension Regulator.
5. Set a reminder for the next cycle in three years.

Remember, aligning re-enrolment dates with payroll cycles is efficient, ensuring a seamless contribution process.

How to Re-Declare Pension Compliance

Post re-enrolment, businesses must re-declare their compliance. Ensure that this is completed five months before:

• Your last re-enrolment date
• The third anniversary of your staging date

Fines can be imposed for failing to re-declare. The Pension Regulator’s online portal facilitates this process, and businesses should be prepared with necessary details about their

In Summary

You’re now equipped with the knowledge to navigate pension re-enrolment, ensuring your business remains in line with UK pension regulations. Regular monitoring can avert potential penalties, which can be as severe as £10,000 daily.

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If managing your pension scheme feels overwhelming, think about transitioning to a provider like Penfold, an award-winning workplace pension that makes managing your auto enrolment scheme easy. See what just a few of Penfold’s clients have to say.

Book a demo with Penfold today.