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Top Ten Tips to prevent the real headache of re-enrolment
For many employers the headache of auto-enrolment (AE) was exacerbated by the introduction of Real Time Information (RTI) to PAYE. Struggling to get RTI sorted meant that AE was just another burden on the payroll and pension department.
Many payroll providers chose to focus upon RTI initially, meaning that preparations for AE for larger employers was not easy. Once again, recent changes to the pension and taxation environment and Budget 2016 coincide with AE planning for larger employers - specifically re-enrolment.
At a time when finance, HR and payroll departments are already stretched it will be time to go through the AE process again and re-enrol those not in a pension arrangement. For those companies with more than 500 employees re-enrolment could be this year.
Have easements made it easy?
"Since the first phase of staging, there has been the introduction of AE easements and for many this will be the chance to consider whether they should take a different approach."
Since the first phase of staging, there has been the introduction of AE easements and for many this will be the chance to consider whether they should take a different approach. The easements could simplify the re-enrolment process but there are many other pitfalls to overcome.
Add into the mix the change of staff within departments who were originally enrolled with AE process and strategy with the compounding of process errors - the AE headache begins all over again. Despite a handful of easements, the legislation is still complex and software available to help manage AE varies from provider to provider.
Recent research from Sanctum Software indicates that approaching two thirds of the employers that have implemented AE have made technical errors. Although not all of these will result in material disadvantages to members, the research shows that over a quarter could mean workers being worse off as a result of shortcomings in employer compliance with AE legislation.
Ensuring compliance going forward
So, what can employers do now to prepare for re-enrolment and ensure that the journey is as smooth as possible? The key is to understand what has been going on, what has been working well, what needs to change and to prepare the strategy and process in advance.
- audit: carry out an in-depth review of strategy, assessment, communications and payments
- no workers to enrol: be careful when choosing your re-enrolment date as if you have no workers to re-enrol your window is much shorter
- choice of re-enrolment date: ensure that your re-enrolment date is aligned with pay reference periods - this is especially important if you have more than one pay reference period due to workforce segmentation
- eligibility: take care should re-enrolment for some people clash with auto-enrolment for others (there are subtle differences in how each group is treated).
- engage: as early as possible with providers and trustees if there is likely to be a large number of workers to re-enrol
- check: re-enrolment software used for AE can be used for re-enrolment - remember it’s a standalone assessment undertaken in addition to the regular AE assessment each pay period
- note: 'postponement' cannot be used
- communicate: for those that opt-ed out of pension arrangements 3 years ago, being re-enrolled won’t be on their agenda! Communicate in advance, get them engaged, make sure they aren’t surprised when they see a deduction from their pay at re-enrolment date!
- don’t forget: re-registration or declaration of compliance as it’s now known!
- finally… the second re-enrolment date will be within a 6 month window 3 months either side of the third anniversary of its first re-enrolment date, i.e. so not by reference to the original staging date
