Automatic re-enrolment - IRIS...DM2995523 v5A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Automatic re-enrolment

DM2995523 v5A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

Automatic re-enrolmentEarnie Customer Conference Twickenham

The information we provide is for guidance only and

should not be taken as a definitive interpretation of the law.

Managing the auto enrolment re-

enrolment journey

Andrew Fleming

Industry liaison manager

10th November 2015


Topics

Cyclical automatic re-enrolment:

• monitoring eligibility

• automatic re-enrolment process

• choosing the cyclical re-enrolment date

• re-declaration of compliance

• factors to consider

• the next cyclical re-enrolment date

• examples

Immediate automatic re-enrolment:

• trigger events

• the re-enrolment date

• example


Staging profile

0

50,000

100,000

150,000

200,000

250,000

Very large volumes staging from

January 2016 Staging

Re-enrolments

New

businesses

Q1 - April to June

Q2 - July to Sept

Q3 - Oct to Dec

Q4 - Jan to March


Automatic re-enrolment - two types

There are two types of automatic re-enrolment.

• Cyclical re-enrolment:

– On a three-yearly cycle, an employer must put their eligible jobholders,

who are no longer active members of a qualifying scheme, back into an

automatic enrolment scheme.

• Immediate re-enrolment:

– If a jobholder, not through their own choice, ceases active membership of

a qualifying scheme (eg if the scheme ceases being a qualifying one), the

employer must put them into an automatic enrolment scheme

immediately.

• Whether cyclical or immediate, the process of automatic re-enrolment is

broadly the same as for automatic enrolment.

• But, in both cases, postponement may not be used.


Monitoring eligibility for automatic enrolment

• After the staging date, employers will have to assess, every pay period, any

worker who:

i. is not an active member of a qualifying pension scheme, and

ii. is not under postponement or the transitional period, and

iii. has not previously been automatically enrolled (or assessed as an

eligible jobholder whilst an active member of a qualifying schemeϮ).

• Workers assessed as an eligible jobholder would then need to be

automatically enrolled (or postponed).

• Those workers that do not fall into the above category should be left until

the next cyclical re-enrolment date.

Ϯ A worker who has simultaneously been an eligible jobholder and an active member of a qualifying

scheme since the later of:

• the employer’s staging date; or

• the date they started work for the employer; or

• the last day of postponement.


Cyclical re-enrolment

• On the re-enrolment date, workers will need to be assessed and, if an eligible

jobholder, automatically re-enrolled† if these conditions apply:

– they are not currently an active member of a qualifying scheme; and

– they are not being monitored every pay period (ie they have previously

been automatically enrolled or assessed as an eligible jobholder whilst an

active member of a qualifying scheme); and

– are not subject to the transitional period;

and

i. they opted-out or ceased membership of a qualifying scheme more

than 12 months ago - or

ii. if they opted-out or ceased membership of a qualifying scheme within

the previous 12 months – and the employer wishes to automatically

re-enrol them (ie the employer can choose whether to do this or not).

• Postponement cannot be used at re-enrolment.

† Exceptions may be applied under April 2015 regulations (eg if in notice period or have tax protection)


Automatic re-enrolment process

For both immediate or cyclical re-enrolment, the employer must automatically

enrol the jobholder into an automatic enrolment scheme.

Alternatively, if the jobholder was already a member of a scheme which was only

non-qualifying because the contributions were below the legal minimum:

• the employer could automatically increase the contributions to the legal

minimum or higher (although this may require consultation with the members).

The process is similar to automatic enrolment:

• with a 6 week joining window and the right to Opt out, and

• worker communications need to be issued (ie a re-enrolment letter).

However, since postponement cannot be used, if the re-enrolment date is part

way through a pay reference period, then pro-rated contributions may be due.

If a worker chooses to Opt out, a refund of all of their contributions paid since the

re-enrolment date will be due (so if they were already a member and their

contributions have been increased, the refund is not just the increased level of

contributions).


Choosing the cyclical automatic re-enrolment date

Cyclical automatic re-enrolment date (CARD) occurs approximately every three

years after an employer’s staging date.

• Choosing a CARD:

– the CARD must fall within a 6 month window, which starts 3 months before

the third anniversary of the staging date (eg an employer who staged on 1

Oct 2012, may choose any day between 1 July and 31 Dec 2015);

– the employer can only choose one date (eg an employer cannot use one

re-enrolment date for monthly paid workers and another for weekly paid

workers).

• The CARD is the automatic re-enrolment date which, for those being

automatically re-enrolled, will be:

– the effective start date of membership of a pension scheme,

– the start of the 6 week ‘joining window’ (during which the enrolment letter

needs to be issued and active membership achieved),

– the start date of the calculation of pension contributions.

Choosing the cyclical automatic re-enrolment date (CARD)


Choosing Choosing the cyclical automatic re-enrolment date (CARD)


Re-declaration of compliance

The deadline for the re-declaration of compliance is 2 months after the

employer’s chosen cyclical re-enrolment date (CARD) - unless:

• there are no eligible jobholders to re-enrol on the automatic re-enrolment

date - in which case, the deadline for re-declaration is the day before the

three year anniversary of the previous declaration of compliance.

The re-declaration will need to report on the following:

• total number of workers already in a qualifying pension scheme

• number of workers in transitional period

• number of workers re-enrolled (per scheme)

• total of others (ie those not in any of the above categories)

• total number of workers (and the totals should add up).


Re-enrolment 6 month period

Example – staging date to first CARD

Previous

declaration of

compliance

completed

date

12/01/13

10/12/15

CARD

chosen

by

employer

09/02/16

Re-declaration

of

compliance

deadline if

workers to re-

enrol on CARD

Pre 11/12/14

for opt-

outs/ceased

membership

cut off

Re-declaration

of compliance

deadline if no

EJH on CARD

11/01/16

1 Oct 2014

Staging date

1 Oct 2012

1 Oct 2013

3rd year anniversary

1 Oct 2015

31/12/15

Latest

date

01/07/15

Earliest

dateCyclical automatic re-enrolment occurs

approximately every 3 years after an employer’s

staging date.

Employer’s choice of date within 6 month window

based on 3 year anniversary of staging date or

previous cyclical automatic re-enrolment date and

set at employer, not payroll, level.


Considerations when choosing a CARD

Considerations when choosing a cyclical automatic re-enrolment date (CARD)

• If the pension scheme requires pro-ration, as postponement cannot be used:

– If the software is not able to calculate pro-rata contributions, can a CARD

be found which is the start of a pay reference period for all pay cycles?

• Questions to ask the pension provider:

– Does the pension scheme require pro-ration (and, if so, can the scheme

rules be changed)?

– If it is a GPP (Group Personal Pension), does it allow re-activation of

pension memberships?

• Questions to ask the software provider :

– Will the software identify appropriate workers at re-enrolment?

– Is enrolment letter template available (can be same as automatic enrolment

letter except references to ‘enrolment’ replaced with ‘re-enrolment’)?

– Can system calculate pro-rated pension contributions (if required)?


Next cyclical re-enrolment date (CARD)


Re-enrolment 6 month period

Next cyclical re-enrolment date (CARD)

Previous

re-declaration

of compliance

date

09/02/16

01/03/19

CARD

chosen

by

Employer

30/04/19

Re-declaration

of compliance

deadline, if

there are

workers to

re-enrol on

CARD of

01/03/19

02/03/18

12 months

before CARD

Opt Outs

/Ceased

membership

cut off

Re-

declaration of

compliance

deadline if no

EJH on CARD

08/02/19

Previous CARD

10th Dec 2015

3rd Year Anniversary

10th Dec 2018

09/03/19

Latest

Date

10/09/18

Earliest

Date

Cyclical automatic re-enrolment occurs

approximately every 3 years after an

employer’s staging date.

Employer’s choice of date within 6

month window based on 3 year

anniversary of staging date or previous

cyclical automatic re-enrolment date

and set at employer, not payroll, level.


Immediate automatic re-enrolment

Immediate automatic re-enrolment is triggered when:

• A jobholder’s active membership of a qualifying pension scheme (QPS)

ceases for any reason other than the actions of the jobholder.

• An employer (not the jobholder) causes, by act or omission, the QPS to be no

longer qualifying.

There are 5 specific events that may trigger immediate automatic re-enrolment:

a. the eligibility criteria in the scheme rules are amended

b. if the pension contributions defined in the scheme rules fall below the legal

minimum levels (eg when the DC legal minimums increase in Phase 2)

c. managers of a personal pension scheme make the scheme paid up

d. an eligible jobholder working outside the UK for an employer, returns to work

(or ordinarily work) in the UK for them and is not an active member of a QPS

e. the rules of the scheme do not allow active membership to continue when

earnings fall below the lower level of qualifying earnings in a pay reference

period


This example shows where a qualifying pension

scheme (QPS) uses contribution rates which do not

increase in line with phasing (minimum contribution

rates are being increased on 1 October 2017 and

again on 1 October 2018).

One solution is to increase the contribution rates to

meet the minimum, if scheme rules allow this.

If not, then jobholders will need to be immediately

re-enrolled into an automatic enrolment scheme.

Pension scheme is no longer

qualifying

1 Oct 2017

Immediate

re-enrolment of

all jobholders

into AE scheme

01/10/17

6 week joining

window ends

midnight

11/11/17

Staging date

1 Oct 2015

Last day pension scheme is

qualifying

30 Sept 2017

Immediate automatic re-enrolment


Any questions?

• Letter templates for employers:

www.tpr.gov.uk/employers/write-to-your-staff.aspx

• Our detailed guides for employers and pension professionals:

www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx

• Further guidance on re-enrolment:

www.tpr.gov.uk/docs/detailed-guidance-11.pdf

• Phasing explained at:

www.tpr.gov.uk/employers/phasing.aspx

http://www.tpr.gov.uk/employers/write-to-your-staff.aspx

http://www.tpr.gov.uk/pensions-reform/detailed-guidance.aspx

http://www.tpr.gov.uk/docs/detailed-guidance-11.pdf

http://www.tpr.gov.uk/employers/phasing.aspx


We are here to help!

Request a guest speaker:

https://secure.tpr.gov.uk/speaker-request.aspx

Contact us at:

www.tpr.gov.uk/contact-us.aspx

Subscribe to our news by email:

https://forms.thepensionsregulator.gov.uk/subscribe.aspx

Connect with us on LinkedIn:

www.linkedin.com/groups?gid=2675456

Follow us on Twitter:

https://twitter.com/TPRgovuk

Thank you

The information we provide is for guidance only and should not

be taken as a definitive interpretation of the law.

https://secure.thepensionsregulator.gov.uk/speaker-request.aspx

http://www.tpr.gov.uk/contact-us.aspx

https://forms.thepensionsregulator.gov.uk/subscribe.aspx

http://www.linkedin.com/groups?gid=2675456

https://twitter.com/TPRgovuk


Additional slides


New regulations in force from 1 April 2015

Following consultation, DWP have laid new regulations.

• These came into force on 1 April 2015.

• They aim to reduce the administrative overhead, especially for small and

micro employers, for assessment and issuing worker information.

• Many of these changes are ‘permissive’- ie not mandatory and so employers

can continue to follow the ‘old’ rules indefinitely - apart from defined benefit

(DB) quality requirements.

The new regulations cover:

• worker information requirements

• exceptions

• DB scheme quality requirements.


Worker information requirements

There are 4 occasions when communications are needed:

1. enrolment

2. postponement (one letter)

3. worker’s right to opt-in/join a scheme, and

4. when applying the transitional period.

You no longer need to distinguish between an entitled worker and a non

eligible jobholder for communication purposes - or know that they have

changed category if they are not an eligible jobholder.

And these letters are no longer required:

• the entitled worker and non eligible jobholder tailored letters

• the ‘already member of qualifying pension scheme’ letter.

Note: Employers can still use the ‘old’ template letters if they wish to.


Who is excluded?

From 1 April 2015, new exceptions were introduced covering workers:

• in their notice period

• who have previously ceased active membership of a qualifying pension

• with HMRC tax protected status for their pension savings

• who have received a pension winding-up lump sum payment.


Exception - workers in notice period

If notice is given or received by the worker (eg resignation or dismissal):

• before, or up to 6 weeks after, the automatic enrolment/re-enrolment

date then the employer does not have to enrol the worker.

During their notice period the worker cannot opt-in or join.

If notice is withdrawn, then the enrolment duty will be effective from this date.


Exception - workers who have ceased active membership - i

1. If a worker is assessed and triggers automatic enrolment (for the first time) and

they had previously contractually joined a qualifying pension scheme* (even if

before the employer’s staging date), then:

a. if they ceased membership 12 months or less before the assessment date –

then the employer may choose whether or not to automatically enrol them

(if the employer chooses not to automatically enrol them, the employer should

leave them until the cyclical re-enrolment date);

or

b. if they ceased membership over 12 months before the assessment date – then

they should not be automatically enrolled, but should be left until the cyclical re-

enrolment date.

2. Workers who have previously been automatically enrolled and opted out or

ceased membership of that scheme, should not be assessed until the cyclical re-

enrolment date.

This means an employer could choose not to assess any worker who has

previously been an active member of a qualifying scheme - until the cyclical re-

enrolment date.* or a pension scheme that would have been a qualifying

scheme if the worker had been a jobholder when they ceased


Exception - workers who have ceased active membership - ii

On the cyclical re-enrolment date, the employer should identify workers:

• who previously contractually joined a qualifying pension scheme* (even if

before the employer’s staging date)

or

• who have previously been automatically enrolled into a qualifying pension

scheme

and either opted out or ceased membership of that scheme.

These workers should be assessed on the cyclical re-enrolment date and, if an

eligible jobholder, automatically re-enrolled - unless:

• they ceased membership/opted-out within 12 months (ie 12 months or less) of

the cyclical re-enrolment date - in which case, the employer may choose whether

or not to automatically re-enrol them.

If the employer chooses not to automatically re-enrol them, the employer will have no

duty to re-enrol them until the following cyclical re-enrolment date.

* or a pension scheme that would have been a qualifying

scheme if the worker had been a jobholder when they ceased


Exception - workers with HMRC tax protection

Where an employer has ‘reasonable grounds to believe’ (eg the worker shows

them documentary evidence) that a worker has HMRC tax protected status for

their pension savings (eg Primary, Enhanced or Fixed protection):

• the employer may choose not to automatically enrol/re-enrol them.

The worker would still have the right to opt-in/join.


Exception - workers with winding-up lump sums

For a worker who has:

i. ceased membership of a defined contribution (DC) scheme, and

ii. been paid a Winding-Up Lump Sum (WULS), and

iii. ceased employment, and

iv. is subsequently re-employed by the same employer...

then:

if they have an automatic enrolment / re-enrolment date which falls up to 12

months after the payment of the WULS,

the employer may choose whether to enrol them or leave them until the

next cyclical re-enrolment (and the re-employed worker does not have

the right to opt-in or join during the 12 months after a WULS payment)

or, if they have an automatic enrolment date which falls more then 12 months

after the payment of the WULS,

then they will have no duty to re-enrol them until the next cyclical

re-enrolment date


DB schemes - quality requirements

As contracting out is being abolished, new quality requirements for defined

benefit (DB) schemes are needed.

In addition to the existing test scheme standard a new alternative is set out in the

regulations.

These new requirements are contribution rate tests, based on the cost of

providing benefits for members.

The basic test is 10% of qualifying earnings (QE), but DB schemes do not use

QE as their definition of pensionable pay, so there are four alternatives:

– 11% of pensionable earnings where pensionable earnings is at least

basic pay

– 10% of basic pay if basic pay is at least 85% of total earnings on average

– 9% of total pay if total pay is pensionable

– 13% of basic pay above the national insurance lower earnings limit or

basic state pension (for cover schemes which have a state pension

offset)


DC self certification during phasing period

Up to

1st Oct 2017

1st Oct 2017

to 30th Sept

2018

From

1st Oct 2018

Pensionable Salary

(Basis of

% Contributions)

Set 1

(Tier 1)

2% Employer

/ 3% Total

3% Employer

/ 6% Total

4% Employer

/ 9% Total

Scheme Definition

(if >= basic pay from £1)

Set 2

(Tier 2)

1% Employer

/ 2% Total

2% Employer

/ 5% Total

3% Employer

/ 8% Total

85% of Total Pay

(scheme average)

Set 3

(Tier 3)

1% Employer

/ 2% Total

2% Employer

/ 5% Total

3% Employer

/ 7% Total

100% of

Total Pay

For further details see the DWP guidance document:

www.gov.uk/government/uploads/system/uploads/attachment_data/file/307083/money-purchase-

schemes-guidance.pdf

http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/307083/money-purchase-schemes-guidance.pdf

Documents

Automatic re-enrolment - IRIS...DM2995523 v5A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction. Automatic re-enrolment