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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
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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
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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
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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who are no longer active members of a qualifying scheme, back into an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.
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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.
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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)
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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).
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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)
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Choosing Choosing the cyclical automatic re-enrolment date (CARD)
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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).
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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.
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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)?
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Next cyclical re-enrolment date (CARD)
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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.
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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
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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
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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
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Thank you
The information we provide is for guidance only and should not
be taken as a definitive interpretation of the law.
DM2995523 v5A These slides remain the property of The Pensions Regulator and their content should not be altered on reproduction.
Additional slides
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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.
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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.
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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.
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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.
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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
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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
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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.
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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
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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)
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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