How To Prepare For Cyclical Automatic Re-Enrolment

In the past, many workers were not really aware of the benefits of enrolling into a pension scheme and in many cases, were not really given much information about it, if any, by their employer. Enrolling into a pension was usually something only seriously considered by the older workforce, as younger people often had the view that they didn’t really need to think about it yet. This attitude changed quite significantly when the Government introduced automatic enrolment.

Auto-Enrolment Implementation.

The auto-enrolment regulations were introduced in October 2012 and applied to those employees who are between 22 and the state pension age, earning a salary of more than £10,000 per year and working in the UK. Auto enrolment means that if you fit the criteria, your employer must automatically enrol you for the company pension when you start in your job. As an employee, you are allowed to opt out of the pension scheme, although you must do this by speaking to the pension company. If you are choosing to opt out within a month of commencing your role, you will only get your own contribution back.

Cyclical Auto-Enrolment.

The responsibility doesn’t quite end there for employers, however, as there is a further duty to be prepared for with cyclical auto-enrolment and with the 3 years now upon us since the start of auto-enrolment, it is time to start acting on it. If an employee has chosen to opt out of the auto-enrolment scheme, the employer must enrol them again after 3 years.

Best Practice.

Many employers are probably only just beginning to get their head around the auto-enrolment process and now have the cyclical auto-enrolment process to cope with. As with anything, preparation is the key with this. As an employer, you will need to work out which of your eligible employees have opted out of the scheme. It is important to be aware that many employees don’t have a clue about any of these aspects of payroll, so it is good practice to keep them informed. It will save time and hassle for you in the long run, as you will end up being inundated with questions, if it affects a large proportion of your workforce.

What To Do Next.

As long as it’s within 3 years from the staging date of the auto enrolment process, the employer should decide on the date for the cyclical auto enrolment. There is also the other responsibility of choosing the pension scheme, which is only really an issue if there is more than one in place. In most cases, there will only be one. If not, the employer should make the decision on which to use. It is important to have everything in place and employees informed, prior to the 3 years, as this will take pressure off, instead of having to rush to do it as the date draws closer. The Government website will have more information on this and how it will affect your payroll.