Occurring on a three-year cycle, re-enrolment makes sure that eligible employees who chose not to opt in during the previous round of auto-enrolment are reminded of the benefits of being part of the pension scheme and have the chance to opt in again. This may seem a bit of a potential headache for businesses, especially those employing a large number of people.
Thankfully the government has recognised this, having amended the legislation for auto-enrolment to lighten the load for employers. These amendments mean that it is not necessary to re-enrol any employees preparing to leave the business, or those who opted out less than twelve months before the re-enrolment process. The government has also allowed those with tax protected status to be prevented from making any contributions that would result in them having to pay a hefty tax charge.
Even with these amendments, there are still challenges for businesses to overcome when it comes to re-enrolment. It has been suggested that many existing payroll computer packages may not yet be ready, leading to unavoidable software upgrades that may require additional cost and staff training to implement.
It’s also important for employers to make sure they carry out the process at the right time. Businesses have a six month window – three months either side of their original staging date – in which to carry out re-enrolment. It’s important, however, not to confuse the specific date of auto-enrolment with the staging date.
Yet another pitfall is the re-enrolment of employees without them being aware of the process. Businesses are not obliged to write to workers about re-enrolling, but it’s highly advised that they do. Keeping employees informed about their options, what will happen if they don’t do anything, and what they need to do to opt out again, will help keep avoidable frustration and confusion to a minimum.