Cyclical automatic re-enrolment support guide › content › dam › ukpaw › ... · This guide helps you through the re-enrolment process from the preparation stage through to

For employers

Cyclical automatic re-enrolment support guide

It’s your legislative responsibility to undertake a re-enrolment process approximately every three years after your staging date, to re-enrol eligible jobholders into your pension scheme.

This guide helps you through the re-enrolment process from the preparation stage through to completion of your re-enrolment. This information is based on our understanding of current taxation law and HMRC practice, which may change.

Getting ready for re-enrolment

Pages 2-17

Workforce assessment and the re-enrolment processPages 18-32

After re-enrolment and beyondPage 33

Re-enrol your employees on SmartEnrolPages 21-26

Completing cyclical automatic re-enrolmentPage 27

Employee communicationsPage 28

Manage opt outs

Pages 29-32

Re-declaration of compliancePage 33

Re-enrolment checklist

Page 34

Decide on your re-enrolment datePages 2-3

Considering pay reference periodsPages 4-8

Your re-enrolment date on SmartEnrolPage 9

Organise your data and payrollPages 10-17

Assessing the workforcePages 18-19

Re-enrol youremployeesPage 20

Cyclical automatic re-enrolment support guide 2

Decide on your re-enrolment dateYou have a six-month window in which your re-enrolment date must fall.

This six-month period starts three months before the 3rd anniversary of your legislative staging date (not the postponement date if used), and ends three months after that anniversary. If you brought forward your staging date, it is that earlier date that is your legislative staging date.

This means you can plan your re-enrolment date around your business commitments and select a date which works for you.

When choosing a re-enrolment date it’s important to bear in mind that you’re required to re-declare your compliance (re-registration) with The Pensions Regulator within a certain timeframe. See page 33 for more information.

Under legislation, you only have one re-enrolment date for all jobholders that you need to re-enrol, even if you have multiple pay reference periods e.g. monthly and weekly. See pages 4-8 for more information.

Postponement can’t be used with re-enrolment, so you need to consider this when you choose your re-enrolment date.

Employer A – staging date 1 May 2013

Employer B – staging date 1 April 2014– staging date brought forward to 1 March 2014

First re-enrolment window:1 February 2016 to 31 July 2016

First re-enrolment window:1 December 2016 to 31 May 2017



Decide on your re-enrolment dateYou should also consider the impact of your chosen re-enrolment date on your next re-enrolment window. Once you’ve chosen your preferred date, your next re-enrolment window will have a mid-point of the 3rd anniversary of your previous re-enrolment date.



Considering pay reference periodsAs there’s one fixed re-enrolment date that applies to everyone, even if you have multiple pay reference periods, you should give careful thought to your re-enrolment date.


Ideally it would be best to align your re-enrolment date with the start of a pay reference period to avoid part period calculations and to make it simpler for you. However if you have multiple pay reference period frequencies, for example monthly and weekly, it may not be possible to choose a re-enrolment date which aligns to the start of the pay reference period for both payrolls.

It’s important you realise the impact of this and choose the most appropriate date.

If you have one pay reference period make sure you align your re-enrolment date to the start of your pay reference period, which will avoid part pay period contributions. Continue to page 9 for how to update SmartEnrol.

If you have multiple pay reference periods, see pages 5-8 for more information.


Considering pay reference periods


Re-enrolment date 1 March 2016

Monthly schedule: pay reference period 1-31 March

Weekly schedule: pay reference period 25 February-2 March

Part pay period contributions SmartEnrol checks the contribution amounts provided, to make sure they’re above the legislative minimum. This minimum amount is based on the period from the selected re-enrolment date to the end of the pay reference period.

Start date – selected re-enrolment date

End date – last day of the pay reference period

Using the previous example to help you understand the impact of selecting a specific re-enrolment date for calculating the legislative minimum contribution:

Monthly:SmartEnrol will calculate the minimum payment due for the period from the re-enrolment date (1 March) to the end of the pay reference period (31 March).

Weekly:SmartEnrol will calculate the minimum payment due for the period from the re-enrolment date (1 March) to the end of the pay reference period (2 March).



You’ll need to update your payroll file as follows:

• Current pay period earnings – this needs to be the full amount (not pro rata) for the pay reference period, as this is used to determine the worker category (eligible jobholder/non-eligible jobholder/entitled worker). This includes those who’ve chosen to pay less than the legislative minimum.

• Current pay period pensionable earnings – for sets 1 and 2, this column needs to detail the full earnings. SmartEnrol will then adjust the figure when calculating the minimum payment.

• Employer/employee contributions – these can be based on the part period that applies from the selected re-enrolment date to the end of the pay reference period.





Example 1Has the employer paid the legislative minimum? The employer’s payroll file details:

Current pay period earnings – £500 (therefore assessed as an eligible jobholder)

Current pay period pensionable earnings – £500 Employer contribution – £6.43Employee contribution – £8.57

Yes, the employer has paid the legislative minimum.

Set 2 means the minimum contributions are 3% for the employer and 5% for the employee.

The part pay period is three days (1-3 May, based on a re-enrolment date of 1 May).

Adam Tulloch is being re-enrolled into a GPP* using Set 2, and is on a weekly pay schedule which runs from 27 April 2020 to 3 May 2020. The re-enrolment date selected by the employer is 1 May 2020.

* The calculation of minimum contributions is different for occupational pension schemes because tax relief is given on the 'net pay' method.

For contributions, the pay reference period is reduced from seven days to three, therefore £6.43 is the minimum contribution they must pay (£15 x 3/7).The pay reference period is reduced from seven days to three, therefore £8.57 is the minimum net contribution they must pay (£20 x 3/7).

£500 3% £15

£500 5% 0.8 £20

Employer

Employee

tax relief adjustment


Example 2 How much does the employer have to pay to cover the minimum contribution?



Sandy Green is being re-enrolled into a GPP using qualifying earnings as the basis for calculating contributions, and is on a weekly pay schedule which runs from 27 April 2020 to 3 May 2020.

The re-enrolment date selected by the employer is 1 May 2020.

The employer’s payroll file details:Current pay period earnings – £500 (therefore assessed as an eligible jobholder)

Current pay period pensionable earnings – £500 Qualifying earnings means the minimum contributions are 3% for the employer and 5%, for the employee and the lower limit for qualifying earnings band is deducted.

The part pay period is three days (1-3 May 2020, based on a re-enrolment date of 1 May 2020).

Lower limit – £120 (for weekly pay)

For contributions, the pay reference period is reduced from seven days to three, therefore £4.89 is the minimum contribution they must pay (£11.40 x 3/7).

The pay reference period is reduced from seven days to three, therefore £6.51 is the minimum contribution they must pay (£15.22 x 3/7).

Employer

Employee

tax relief adjustment

£500 £120 3% £11.40

£500 £120 5% 0.8 £15.20


Your re-enrolment date on SmartEnrol

When you access SmartEnrol you’ll see the re-enrolment information on the home screen.

The ‘next automatic re-enrolment date’ is set to the 3rd anniversary of your legislative staging date, and this is the only field you can update.

The ‘start’ and ‘end’ date fields are the default dates of your six-month window, based on your legislative staging date.

If you try to enter a new re-enrolment date outside of your six-month window, SmartEnrol will reject this and show an error message.

Once you’ve chosen your re-enrolment date (if it’s different to the default date) and it’s within the six-month window, enter this date into the field and click ‘Update’ button.SmartEnrol will display a message to confirm the re-enrolment date has been updated.

You can change this date again if you wish until you begin to process your first re-enrolment payroll.



Organise your data and payrollFor re-enrolment to be successful, it’s important that your employee data is up-to-date and accurate, and your payroll is organised ahead of time. The following ongoing housekeeping activities should also be carried out regularly throughout the year. This will also help make sure you’re accounting for all employees.

Refresh your employee data Refresh your employee data to update any email addresses. This will make sure we have up-to-date information for your employees, and gives them the chance to verify any changes to their email address.

Update payroll to include valid reason codes It’s your responsibility to make sure your payroll is updated to include valid reason codes for jobholders with zero contributions, otherwise you may end up re-enrolling jobholders who shouldn’t be re-enrolled. The reason code should be updated during the month that the event occurs e.g. ‘Family leave’.

Review your exempt employees See pages 14-17 for more information.

Reviewing your employer data You should check your employer details are correct and current. For example, is the default email address for comms correct?

Make sure the person responsible for completing re-enrolment understands what’s required, and how to use SmartEnrol.



Organise your data and payrollEmployees removed from previous payroll files who can’t be identified correctly for re-enrolment

You’ll need to include all employees on your payroll for every assessment; not just for re-enrolment. This is vital to make sure the correct reason code is stored on our system, and the date the employee stopped paying or started paying below the legislative minimum is recorded. This date is then used to track when an employee must be re-enrolled, should their payments remain below the legislative minimum contribution.

Where an employee has been removed from a payroll file, and therefore no reason code or date has been recorded, SmartEnrol will be unable to check for certain whether the employee needs to be re-enrolled in this three-year cycle.

SmartEnrol will check the previous payroll (to the re-enrolment date) uploaded by you, to identify if an active employee submitted a contribution.

If the employee wasn’t included on the previous payroll then we know the employee is not active, but we don’t know when they stopped contributions.

These employees will be included in the re-enrolment exercise, and you have the option to ‘reject’ the employee if they shouldn’t be included.

Similarly, if an employee wasn’t updated correctly for any other reason, for example they should have been marked as exempt, they may also be included for re-enrolment. SmartEnrol will display a list of employees who’ve been identified for re-enrolment. You’ll need to review this list and then update each employee record accordingly by either choosing approved, rejected or exempt.

The next page shows you how to reject an employee flagged for re-enrolment, if they shouldn’t be included.



Rejecting an employee flagged for re-enrolment

Organise your data and payroll

If you want to reject an employee who stopped paying contributions in the last 12 months (but the reason code wasn’t updated at the correct time), you can select ‘Rejected’ on the re-enrolment screen.



Rejecting an employee flagged for re-enrolment


Once you’ve completed this exercise, you’ll see a confirmation window asking you to confirm you are happy to continue.

Click the ‘Continue’ button when you’re ready to move on.



Exempt employees


You’ll need to review your exempt employees prior to the re-enrolment exercise.

There are three situations you’ll need to consider:

1. Employees previously marked as exempt – does this still apply?

a. If not, then you must remove the exemption. See pages 15 and 16 on how to do this.

b. If yes, then you’ll be given the option to re-enrol this employee. You’ll need to decide if this is appropriate for the employee’s situation. See page 25.

2. Employees who become exempt at re-enrolment date. You have the option to approve/reject/exempt an employee as part of the re-enrolment assessment, and can update SmartEnrol accordingly, see page 17.

Reviewing your exempt employees should be considered at every payroll, not just during re-enrolment.



Employees previously marked as exempt


In the ‘Employees’ tab, you should review any employees showing as ‘Exempt’.

You can organise the ‘Worker category’ list into alphabetical order.

You can also decide to see more or fewer records per page by choosing how many entries you want to view at any one time.

Click on the spanner icon to view individual member details.



Employees previously marked as exempt


The ‘Member Details’ will open up a pop-up screen where you can ‘Remove exemption’ if this no longer applies.

The employee will then be assessed on the next payroll run.

You’ll need to do this for each individual employee marked as exempt.



Employees exempt at re-enrolment date


As part of the re-enrolment assessment you have the option to approve/reject/exempt, and can update an employee to exempt if required.



Who must I re-enrol?

Assessing the workforce

You’ll need to carry out an assessment of your workforce to determine if you have any eligible jobholders to re-enrol on your re-enrolment date.

Re-enrolment applies specifically to employees who are assessed as eligible jobholders on the chosen re-enrolment date, and applies to those who have:

opted out of your automatic enrolment pension scheme more than 12 months ago;

ceased active membership of your qualifying pension scheme after the end of the opt out period more than 12 months ago; or

have been paying below the minimum legislative contribution level for more than 12 months.

On the re-enrolment date, all eligible jobholders identified as part of the re-enrolment assessment will be automatically re-enrolled and have the right to opt out. For opt out information, see pages 29-32.

Workforce assessment and the re-enrolment process


Optional re-enrolees

Assessing the workforce

There are optional categories of jobholders to be considered during re-enrolment, however, as we cannot identify all of these jobholders on SmartEnrol, some will be automatically included and some will not in the re-enrolment assessment.

You have the option to reject them if you wish – see pages 12-13.

These jobholders will also have the option to opt out if they’re not excluded from the re-enrolment:

has given notice to end their employment, or has been given notice of dismissal;

has Primary, Enhanced, Fixed or Individual protection;

is a director of the company;

is a partner of a Limited Liability Partnership and isn’t treated as a salaried member under HMRC’s income tax rules;

was paid a winding-up lump sum in the 12 months before the re-enrolment date, and in that same 12-month period left employment and was subsequently re-employed by the company; or

is a ‘qualifying person’ for the purposes of separate UK legislation on occupational pension schemes and cross-border activities within the European Union.

SmartEnrol will automatically include eligible jobholders in automatic re-enrolment who:

opted out or left the scheme at their own request in the last 12 months; or

have reduced their contribution below the legislative minimum contribution in the last 12 months.



Once you’ve assessed your workforce and are ready to complete the re-enrolment process, for the eligible jobholders you need to re-enrol, there are some key things to remember:

Active membership of your qualifying scheme must begin on the re-enrolment date.

Pension contributions must be calculated from the re-enrolment date.

Re-enrolment must be completed within six weeks of the re-enrolment date.

You’ll only need to contact the employees affected by re-enrolment, and this needs to be completed within the six-week joining period. For information on the employee communications you’ll have access to, see page 28.

Re-enrol your employees

The re-enrolment process will form part of your normal payroll for the period in which your re-enrolment date falls. The re-enrolment payroll uses some new screens on SmartEnrol and these are shown in the next few pages, alongside instructions with what to do on each new screen.



Re-enrol your employees on SmartEnrol

This new window will appear when you start a contributions process for a payroll period that contains your selected re-enrolment date.

Once you complete this on the current schedule, you’ll need to complete this on all schedules before re-enrolment will be completed.

You must select ‘Yes’ to all of the statements on this screen before you can proceed, to confirm you understand the importance of these steps.If you select ‘No’ to any of these statements, you’ll see a warning screen and you won’t be able to proceed with the payroll.

Once you’ve selected ‘Yes’ to all of the statements, click on ‘Proceed with payroll’ button to continue.




To make sure the most up-to-date information is used for re-enrolment, you’ll now be prompted to upload a new payroll file instead of re-using previous data.

Click on the ‘Yes, proceed’ button and continue.




The following ‘Approve assessments’ screen will show the employees being enrolled as per the business as usual process. For example, new entrants, opt ins and joiners etc.

You should approve, reject or exempt these employees and then click on the new button ‘Proceed To Re-enrolment Assessment’.




You’ll now see the new re-enrolment screen, which has a similar look to the ‘Approve assessments’ screen.

This screen only includes employees being automatically re-enrolled, and has an additional column ‘Re-enrolment Reason’.

This will show the reason code you updated previously, to let you know why the employee has been flagged for re-enrolment.

Opted out employees will show as blank.

Once you have approved, rejected or exempted your employees click proceed to optional re-enrolment.



Optional re-enrolment

• Opted out of your automatic enrolment pension scheme less than 12 months ago.

• Ceased active membership of your qualifying pension scheme after the end of the opt out period less than 12 months ago.

• Has been paying below the minimum legislative contribution level for less than 12 months.

• Has given notice to end their employment, or you have given them notice of dismissal.

• Has Primary, Enhanced, Fixed or Individual protection from lifetime allowance tax charges.


• Was paid a winding-up lump sum in the last 12 months while employed by you, and within the 12 month period that started on the day the winding-up lump sum was paid, the employee left employment and was subsequently re-employed by you.

• Holds the office of director or is a partner of a Limited Liability Partnership that does not fall within HMRC’s ‘salaried partner’ rules for income tax purposes.

The new screen you’ll see is similar to the re-enrolment screen but it will only show you the optional eligible jobholders who you can choose to re-enrol.

We’ve set the default status for these jobholders to ‘Exclude’, so you’ll need to consider each jobholder individually and decide if you want to re-enrol them. Change the status to ‘re-enrol’ for each of the jobholders you want

to re-enrol. If you want to re-enrol all of the identified jobholders, you can select the ‘Re-enrol All’ button then click submit.

If you have no employees who fall into the optional re-enrolment categories mentioned above then this screen will not appear in your payroll process.

In addition to the employees you must re-enrol, you can also choose to re-enrol any eligible jobholder who:

You can find out more about these exceptions to cyclical re-enrolment in paragraphs 30 to 35 of the Pension Regulator’s guidance.

https://www.thepensionsregulator.gov.uk/-/media/thepensionsregulator/files/import/pdf/detailed-guidance-11



A new screen will appear that shows members being assessed for re-enrolment who don’t currently meet the minimum legislative contribution amount – these are highlighted in red.

The ‘Required contributions’ section shows what the contributions should be. This minimum amount is based on the period from the selected re-enrolment date to the end of the pay reference period.

In this case, you’ll need to update the payroll file, as the minimum contribution amount must be paid.

Once the payroll file has been updated and reloaded, you should start the process again (from page 21).



Completing cyclical automatic re-enrolment

Once you complete your re-enrolment payroll on all ‘active’ schedules, you’ll see that the re-enrolment dates on the home screen move on three years to your ‘Next automatic re-enrolment date’ (see page 9).

However, if you have multiple pay reference periods, for example monthly and weekly, you may come across a warning message saying that re-enrolment is not complete. This message is to highlight that there are other schedules still to complete. You can cancel the payroll you were about to start and complete re-enrolment on the schedules outstanding or proceed with the current payroll as planned.

Should you have ‘active’ schedules which you no longer use or know will not complete a re-enrolment payroll these schedules will automatically archive after 3 months. Or, you can contact us to have these removed before then.



Employee communications

SmartEnrol now includes two re-enrolment communications, and a third communication for NEST. These are email generated communications. If your employees don’t have email addresses, the emails will be delivered to your previously specified mailbox for you to print and send to the recipient directly.

You’re required to contact all employees affected by re-enrolment within the six-week joining window.

Communication type Description When it’s issued

Re-enrolment For eligible jobholders who opted out or stopped paying contributions. Tells the jobholder they’re being re-enrolled into the company pension scheme.

Sent to any eligible jobholders being re-enrolled.

Re-enrolment below legislative minimum

For eligible jobholders who are paying below the minimum legislative amount. Tells the jobholder they’re being re-enrolled into the company pension scheme.

Sent to any eligible jobholders being re-enrolled.

Re-enrolment/Re-enrolment below legislative minimum – NEST

For eligible jobholders who are being re-enrolled into the pension scheme provided by NEST.

Sent to any eligible jobholders being re-enrolled and the pension scheme is provided by NEST.



Manage opt outsAny employee that you’ve re-enrolled will remain in your scheme, however they have the opportunity to opt out or cease membership if they wish. The employee has a one-month period after re-enrolment where they can opt out, and you would then use your existing opt out and refund processes. You’ll need to process any opt out notices and keep records accordingly.

There are two potential scenarios here:

Employee was paying below the legislative minimum and wants to pay less again

If an employee wants to revert to paying an amount that’s less than the legislative minimum amount, they shouldn’t opt out.

Instead they should discuss this with you, to arrange for their contributions to be reduced again. The employee will need to pay the higher level of contribution until the arrangements have been put in place. This will then be reviewed again at the next cyclical re-enrolment date.

Employee wants to opt out An employee can opt out of the pension scheme entirely if they wish. If this happens, the contribution deducted from the re-enrolment payroll and during the opt out period should be refunded.

Opting out of pension saving is something your employees should think about carefully. It’s important that your employees understand the consequences of deciding to opt out of the pension scheme.



Manage opt outs

If an employee has been paying below the legislative minimum prior to the re-enrolment date (and is therefore included in re-enrolment), the full contribution is held with the option to opt out. If the employee opts out then the full contribution will be refunded by you.

There’s only an option for full opt out. The employee can’t opt out of the increase only.

A specific re-enrolment communication has been prepared for these employees, confirming that if they wish to pay below the minimum they need to arrange this separately with you, and pay the higher level of contribution in the meantime. See the previous page for more information and page 28 for a description of the different employee communications.

As the contribution will be held, there will be a break in contributions to the scheme in the meantime.

If you use SmartPay, see page 31.

If you use ARC, see page 32.


Held contributions for employees paying below legislative minimum contribution


Manage opt outs – SmartPay

You should access the ‘Match Members’ area.

Where members are in an opt out period, you will need to ignore these until their opt out period is completed.

Tick ‘Ignore’ or ‘Select all’, if there’s more than one jobholder affected.



Manage opt outs – ARC

You should access the ‘Non-contributors’ area.

Where members are in an opt out period, you’ll need to confirm this in the ‘Employment status’ field for each jobholder.



Re-declaration of compliance(formerly re-registration)

You have to complete a re-declaration of compliance (formerly re-registration) for The Pensions Regulator, regardless of whether or not you have anyone to re-enrol.

For your first re-enrolment date, the re-declaration must be completed within a five-month period starting from the 3rd anniversary of your staging date. You can find this date on your original declaration of compliance.

You can use The Pension Regulator’s online service to complete your re-declaration.

Remember, this is an ongoing responsibility which you’ll need to undertake every three years.

After re-enrolment and beyond

http://www.autoenrol.tpr.gov.uk/


Re-enrolment checklist

Checklist

Have you chosen your preferred re-enrolment date and updated SmartEnrol? - considered your pay reference period;

- remembered the impact on your next re-enrolment period; and

- checked the time limit for your re-declaration of compliance?

Have you organised your employee data in advance? - refreshed employee data;

- updated your payroll with valid reason codes; and

- reviewed your exempt employees or employees removed from your payroll?

Have you assessed your workforce, including reviewing any optional re-enrolees?

Have you completed your re-enrolment process on SmartEnrol?

Have you communicated to all affected employees within the six-week period?

Have you managed any employee opt outs or those who want to pay less?

Have you completed your re-declaration of compliance for The Pensions Regulator?

Have you checked your employer details on the employer data tab to ensure your email address and contact information is up-to-date?

Aegon is a brand name of Scottish Equitable plc (No. SC144517) and Aegon Investment Solutions Ltd (No. SC394519) registered in Scotland, registered office: Edinburgh Park, Edinburgh, EH12 9SE. Both are Aegon companies. Scottish Equitable plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Aegon Investment Solutions Ltd is authorised and regulated by the Financial Conduct Authority. Their Financial Services Register numbers are 165548 and 543123 respectively. © 2020 Aegon UK plc

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aegon.co.uk @aegonuk Aegon UK Aegon UK

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Cyclical automatic re-enrolment support guide › content › dam › ukpaw › ... · This guide helps you through the re-enrolment process from the preparation stage through to