Re-enrolment. IRIS and Earnie Customer Conference. Andy Nicholls Industry liaison manager. 16 November 2017

Transcription

1 Re-enrolment IRIS and Earnie Customer Conference Andy Nicholls Industry liaison manager 16 November 2017 The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

2 Topics Cyclical re-enrolment: Overview Who to assess Exceptions Choosing the cyclical re-enrolment date Completing the re-declaration of compliance Worked example Immediate re-enrolment: Overview Trigger events Example

3 What s happened so far Employers declaring since Jan 2015 As at the end of October ,895 employers have completed their declaration of compliance, covering 27.7m workers, of which: 10.6m (38%) were already in a qualifying scheme; 8.8m people (32%) were automatically enrolled; 435k (2%) workers had the transitional period applied; and 7.8m (28%) were none of the above. 33,136 employers have completed a re-declaration of compliance 530,000 workers have been re-enrolled DM v10p These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

4 Re-enrolment - two types There are two types of re-enrolment. Cyclical re-enrolment: On a three-yearly cycle, an employer must re-enrol certain eligible jobholders 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 cannot be used.

5 Cyclical re-enrolment - overview On a three-yearly cycle, an employer must re-enrol certain eligible staff back into an automatic enrolment scheme. The re-enrolment date is based on the employer's original staging / duties start date - and not on when any members of staff were put into or left a pension scheme. The employer is required to select a cyclical automatic re-enrolment date, in a 6 month window, on which to assess and re-enrol all of their eligible staff. The re-enrolment process : takes place alongside the normal pay period assessment process, and occurs in the pay period in which the cyclical re-enrolment date falls. Unlike the normal pay period monitoring and assessment process, postponement cannot be used for those being re-enrolled. As with the original staging process, some advance planning is required.

6 Monitoring eligibility for re-enrolment After the staging / duties start 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. Workers assessed as eligible would then need to be automatically enrolled (or postponed). However, those staff who have previously been automatically enrolled (or assessed as eligible, whilst an active member of a qualifying scheme Ϯ ), 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 employer s staging / duties start date (or the date they started work for the employer, if later) and ignoring any period of postponement.

7 How often do you need to assess? Worker status will be one of these: Those who are an active member of a qualifying scheme Those under postponement or the Transitional Period (TP) i. Those who are not an active member of a qualifying pension scheme; and ii. are not under postponement or the Transitional Period; and iii. have not previously been automatically enrolled (or assessed as an eligible jobholder whilst an active member of a qualifying scheme). Those who have opted out or voluntarily ceased membership of a qualifying scheme Action No assessment required Assess at the end of postponement (or TP) Monitor (assess every pay period) Assess at each cyclical re-enrolment date

8 Choosing the cyclical re-enrolment date Cyclical re-enrolment occurs about every three years. Choosing the re-enrolment date: you can choose any day within a 6 month window, starting 3 months before the third anniversary of the staging / duties start date or previous reenrolment date (eg an employer who staged on 1 Oct 2014, may choose any day between 1 July and 31 Dec 2017); the employer can only choose one date (eg an employer cannot use one date for monthly paid workers and another for weekly paid workers). For those being re-enrolled, this will be: the effective start date of membership of a pension scheme, the start of the 6 week joining window (during which the re-enrolment letter needs to be issued and active membership achieved), the start date of the calculation of pension contributions.

9 Considerations when choosing a date Considerations when choosing a cyclical re-enrolment date Postponement cannot be used so, if the re-enrolment date selected is part way through a pay reference period, then pro-rated contributions may be due. Questions to ask the pension provider: Does the pension scheme require pro-ration (and, if so, can the scheme rules be changed)? Questions to ask the software provider : Can system calculate pro-rated pension contributions (if required)? If the pension scheme requires pro-ration, or if the software is not able to calculate pro-rata contributions, can a re-enrolment date be found which is the start of a pay reference period for all pay cycles?

10 Additional things to consider We suggest you consider some other points, as part of your preparation: If the person to be re-enrolled is an active member of a scheme which is only non-qualifying because the contributions are below the legal minimum, can the employer simply increase the contributions back up to the normal rate (assuming this is at least the legal minimum)? Is a re-enrolment letter template available (can be same as automatic enrolment letter except references to enrolment replaced with re-enrolment )? Does the payroll software (or other software used to assess staff) support re-enrolment and can identify staff subject to re-enrolment? Note - if a worker chooses to opt out after being re-enrolled, 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).

11 Exceptions - where the employer has a choice Employers may choose whether or not to re-enrol anyone who triggers reenrolment, if any one of these conditions apply: they are directors working under an employment contract, or they are LLP partners, but are not salaried members under HMRC tax rules (duties continue to apply in full to salaried members ), or they are in their notice period (ie notice has been given or received before or up to 6 weeks after the re-enrolment date), or they have HMRC tax protected status for their pension savings, or within the last 12 months (ie in the 12 months prior to the chosen re-enrolment date): they opted out or ceased active membership of a qualifying pension, or they received a winding-up lump sum payment from a trust based pension scheme and ceased employment, and then re-joined the employer. If anyone asks to opt in or join a pension, the employer must enrol them except those in their notice period, who lose their right to opt in or join.

12 Declaration of compliance after cyclical re-enrolment The re-declaration can be completed on or after the cyclical re-enrolment date (postponement cannot be used for re-enrolment). The deadline for completing the re-declaration is 5 months after the 3 rd anniversary of the staging / duties start date (or previous cyclical reenrolment date). Don t wait until the deadline do it as soon as you have run payroll and done the assessment or you may forget. Even if the employer has no one to re-enrol, they will need to choose a re-enrolment date and must make a re-declaration. Make sure you have agreed whether you or your client is doing the declaration. As part of the re-declaration process, the employer must give TPR their chosen automatic re-enrolment date.

13 Information for re-declaration of compliance The re-declaration will need to report on the following: the chosen re-enrolment date number of workers re-enrolled per scheme (don t include people automatically enrolled for the first time) number of workers already in a qualifying pension scheme number of workers in transitional period number of other workers (ie those not in any of the above categories) workers automatically enrolled (not re-enrolled) in this pay cycle should be included in this number the total number of workers (and the totals should add up).

14 Example staging date to first re-enrolment date Staff who ceased membership of qualifying scheme in previous 12 months may be left to employer s next re-enrolment date 10 Dec 2017 chosen re-enrolment date applies to staff on all pay frequencies 11 Dec 2016 earliest day of opt-out / cease membership that allows employer to choose to leave until next re-enrolment date 1 July 2017 earliest date 3rd anniversary of staging date 1 Oct month re-enrolment window 31 Dec 2017 latest date 28 Feb 2018 deadline for re-declaration of compliance (5 months from 3 rd anniversary)

15 Checklist for cyclical re-enrolment Ensure the nominated primary and secondary contact details are up-to-date. Check if the pension scheme(s) would require pro-ration. Check that your software or service provider supports re-enrolment and, if proration is required, whether it can calculate this (or pick a date that avoids it). Identify categories of worker to whom exceptions could apply and your company policy on how these exceptions will be applied. Decide if you will include or exclude staff who opted-out or ceased membership of a qualifying pension scheme within 12 months of the re-enrolment date. From the chosen re-enrolment date, you have 6 weeks to: issue any staff communications (eg re-enrolment letters), and ensure active membership of the pension is achieved. Complete re-declaration of compliance within 5 months of the 3 rd anniversary of staging date / previous cyclical re-enrolment date.

16 Immediate re-enrolment - overview Immediate re-enrolment is triggered when: Specific events occur which lead a jobholder s active membership of a qualifying pension scheme (QPS) to cease. These events arise from action by a third party, such as an employer or pension provider and not as a result of any act or request by the jobholder. Immediate re-enrolment requires that the employer re-enrol the jobholder into an automatic enrolment scheme with effect from the re-enrolment date. The re-enrolment date is not the cyclical re-enrolment date and is specific to the jobholder and the type of trigger event v2h These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

17 Immediate re-enrolment The process is similar to automatic enrolment with: a 6 week joining window the right to opt-out, and worker communications (re-enrolment letter) needs to be issued. However, postponement cannot be used. If the re-enrolment date is part way through a pay reference period, then pro-rated contributions may be due. There are 6 specific events that trigger immediate re-enrolment. These are described in the following slides (referred to as A to F ) v2h These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

18 Immediate re-enrolment trigger events Immediate 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. This could be because: A. the eligibility criteria in the scheme rules are amended, or 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), or C. managers or trustees of a pension scheme make the scheme paid up, or 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 and they did not have an AE date with that employer (then they must be automatically enrolled, not re-enrolled), or 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 F. or where employer and worker have agreed notice to end employment is withdrawn v2h These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

19 Exceptions applying to immediate re-enrolment The exceptions which apply to immediate re-enrolment are the same as those that apply for cyclical re-enrolment. So, employers may choose whether or not to re-enrol anyone who triggers immediate re-enrolment, if they: are directors working under an employment contract, or are LLP partners who are not salaried members under HMRC tax rules, or are people in their notice period, or have HMRC tax protected status for their pension savings, or within the last 12 months (ie in the 12 months prior to the immediate re-enrolment date): opted out or ceased active membership of a qualifying pension (through the member s own choice), or received a winding-up lump sum payment from a trust based pension scheme and ceased employment, then re-joined the same employer. Again, if anyone asks to opt in or join a pension, the employer must enrol them except those in their notice period, who lose their right to opt in or join v2h These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

20 Example - immediate re-enrolment (event B) Staging date 1 Oct 2015 Last day pension scheme is qualifying 5 April 2018 Pension scheme is no longer qualifying 6 April 2018 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 6 April 2018 and again on 6 April 2019). One solution is to increase the contribution rates to meet the minimum, if scheme rules allow this. If not, then eligible and non-eligible jobholders will need to be immediately re-enrolled into an automatic enrolment scheme. Immediate re-enrolment of all jobholders into AE scheme with membership to start from 6 April week joining window ends 23:59 17 May v2h These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.

21 Any questions?

22 Useful links Re-enrolment webinar: Nominate a point of contact: Guidance on re-enrolment: Letter templates for re-enrolment: Information about declaration of compliance: Declaration / re-declaration of compliance (including file upload): Detailed guidance on re-enrolment:

23 Other useful links Frequently asked questions (FAQs) on automatic enrolment: Find a letter code online: Tell us you are not an employer : Increase of legal minimum contributions for DC qualifying pensions: C

24 Thank you We are here to help! Subscribe to our news by Contact us at: Whistleblowing how to contact us: The information we provide is for guidance only and should not be taken as a definitive interpretation of the law.

25 Additional slides

26 Example second re-enrolment date Staff who ceased membership of qualifying scheme in previous 12 months may be left to employer s next re-enrolment date 1 st March 2021 chosen re-enrolment date applies to all employer s staff (on all pay frequencies) 2 nd March 2020 earliest day of opt-out / cease membership that allows employer to choose to leave until next re-enrolment date 10 Sep 2020 earliest date 3rd anniversary of first re-enrolment date 10 Dec month re-enrolment window 9 Mar 2021 latest date 9 May 2021 deadline for re-declaration of compliance (5 months from 3 rd anniversary)

27 Immediate re-enrolment trigger event (A) Event Conditions Example Automatic reenrolment date (A) An employer act or omission causes active membership of a qualifying scheme to cease (and was not at the request of the jobholder). Worker is a jobholder when active membership ceased and did not request this. This could happen through amending the eligibility criteria in the scheme rules, if the jobholder is no longer allowed to remain an active member. The day after active membership of a qualifying scheme ceased.

28 Immediate re-enrolment trigger event (B) Event Conditions Example Automatic reenrolment date (B) An employer act or omission causes the scheme (of which the jobholder is an active member) to cease to be a qualifying scheme (and was not at the request of the jobholder). Worker is a jobholder when the scheme ceased to be a qualifying scheme and did not request this. This could happen if the level of contributions in a DC scheme falls below the legal minimum contribution requirements for a qualifying scheme. For example, if the scheme rules have not been set up to increase contribution rates to meet the increased legal minimums, by 6 April 2018 or 6 April The day after the scheme ceased to be a qualifying scheme for the jobholder.

29 Immediate re-enrolment trigger event (C) Event Conditions Example Automatic reenrolment date (C) The trustees or pension scheme managers cause a jobholder s active membership of a qualifying scheme to cease. Worker is a jobholder when active membership ceased and did not request this. This could happen if the employer of a DC scheme ceases payment of contributions to a pension provider and makes the scheme paid-up. The day after active membership of a qualifying scheme ceased. For example, the employer intends to change the pension provider.

30 Immediate re-enrolment trigger event (D) Event Conditions Example Automatic reenrolment date (D) Active membership of a qualifying scheme ends because the jobholder ceased to be working or ordinarily working in the UK. Worker is an jobholder when active membership ceased. This could happen if the scheme rules do not allow active scheme membership if the member is no longer working or ordinarily working in the UK or if the employer ceases making contributions because they no longer work or ordinarily work in the UK. The employer must assess the worker after they return to work or ordinarily work in the UK. The automatic reenrolment date is the first date that the jobholder criteria are next met (i.e. earnings above the lower level of qualifying earnings and aged between 16 and 74).

31 Immediate re-enrolment trigger event (E) Event Conditions Example Automatic reenrolment date (E) Active membership of a qualifying scheme ceased because the jobholder ceased to have qualifying earnings in the relevant pay period. Worker is an jobholder when active membership ceased. This could happen if the pension scheme rules do not allow active membership to continue when earnings fall below the lower level of qualifying earnings in a pay reference period. The employer must now assess the earnings of the worker each pay reference period. The automatic reenrolment date is the first date that jobholder criteria are next met (i.e. their earnings are above the lower level of qualifying earnings and aged between 16 and 74).

32 Immediate re-enrolment trigger event (F) Event Conditions Example Automatic reenrolment date (F) The employer and the worker have agreed that notice to end employment is withdrawn. Worker is a jobholder and not already an active member of a qualifying scheme on the date that they and the employer agree the notice is withdrawn. The date of the agreement to withdraw the notice, if the eligible jobholder criteria are met on this date. If not, the first date the eligible jobholder criteria are next met.