Sometimes, just one day can make a difference when it comes to workplace pension duties.
We recently contacted an employer to remind them that their three-yearly pension re-enrolment and re-declaration duties were due. The employer explained that, as the business was going through financial difficulties, they wanted to save on costs and would try to complete the Declaration of Compliance themselves. As nobody was currently an active member of the pension scheme, they believed there was nothing else to do for another three years.
However, when we looked at the employees on the payroll, we noticed that there were still pension duties that needed attention.
There were two employees on the payroll:
The director – in this particular case, the director did not need to be re-enrolled, based on their circumstances.
The second employee – This is where the one-day difference came in. They met the criteria for automatic re-enrolment but had opted out of the pension scheme 12 months and one day before the re-enrolment date.
Why did that one day matter?
Under the re-enrolment rules, an employer can choose not to re-enrol an employee who opted out within the 12 months before the re-enrolment date. However, this employee had opted out just outside that period. As they were still eligible, the employer was required to automatically re-enrol them.
We brought this to the client’s attention and explained that there were duties to deal with before completing the re-declaration. Simply submitting the re-declaration with TPR would not put things right.
We also understood the client’s financial situation. Rather than leaving them to deal with everything themselves, we decided to help and completed the necessary re-enrolment work as a gesture of goodwill, without charging an additional fee. We also helped the client make sure the information submitted to The Pensions Regulator was correct. The client was very happy and grateful for the support.
What does workplace pension administration actually involve?
This example highlights that workplace pension responsibilities go beyond the three-yearly re-enrolment process. Employers have ongoing duties throughout the year, involving three connected parts: payroll, the company’s workplace pension scheme and The Pensions Regulator.
1. Payroll and employee assessments
Every time an employee starts work, their pension eligibility needs to be considered. Their earnings also need to be monitored, as someone who does not initially qualify for automatic enrolment may become eligible later.
This also involves applying postponement where appropriate, preparing and issuing the required employee letters, processing opt-ins and opt-outs and making sure pension contributions are correctly calculated through payroll.
2. The company’s workplace pension scheme
The pension scheme needs to be kept up to date too. This includes adding employees when required, updating their details, processing changes when employees opt in or out, dealing with employees who leave and making sure contributions are paid correctly.
3. The Pensions Regulator
Employers also have responsibilities towards The Pensions Regulator (TPR). These include completing the initial Declaration of Compliance and the three-yearly Re-declaration of Compliance where required, keeping employer details up to date and informing TPR when the company’s circumstances change and its automatic enrolment duties start or cease, where required.
As you can see, all three parts are connected. A change in an employee’s circumstances may require an update to payroll, the pension scheme and, where necessary, the employer’s records with TPR.
Workplace pensions require ongoing attention
Workplace pension duties do not stop once an employee has been enrolled or once a declaration has been submitted.
An employee who does not initially qualify for automatic enrolment may become eligible when their earnings increase. An employee may leave the company, opt out or decide to join the pension scheme at a later date. Each situation can require a different action from the employer.
There are also specific deadlines and rules around postponement, employee communications, contributions and re-enrolment.
For this reason, workplace pension administration involves regular monitoring, assessments, updates and communication to make sure the employer’s payroll, pension scheme and regulatory records remain in line with their obligations.
For business owners, having the necessary pension administration monitored throughout the year helps ensure that important changes and deadlines are not overlooked.
Get help with workplace pension re-enrolment
If you are approaching a re-enrolment date, need to review opt-out records or are unsure whether a re-declaration is sufficient, speak to Business Help UK Group. Our payroll team can help review the responsibilities linked to your employees and pension arrangements.
Official guidance and further reading
- The Pensions Regulator: re-enrolment obligations
- The Pensions Regulator: re-declaration of compliance
