Changes to Auto-Enrolment Introduced
Following a consultation on automatic enrolment by the government earlier in the year, and feedback from employers that had already implemented auto-enrolment, which indicated some operational difficulties and unintended consequences with the existing legislation, certain changes have now been implemented in a new set of regulations.
Most of these changes, which aim to simplify the procedures and introduce more flexibility, came into effect on 1 November 2013. Others will come into effect in April 2014.
Included among the initial changes are the following:
- Employers now have the option of aligning pay reference periods with payroll by using tax periods rather than earnings periods (useful for employers with irregular pay patterns).
- The deadline for paying contributions to pension providers has been standardised at three months for all members, whether joining through auto-enrolment, re-enrolment or choosing to join.
- Opt-out notices need only to contain certain prescribed information and may be more flexible in form.
- The test scheme standard used to assess defined benefit schemes for auto-enrolment compliance has been simplified and made clearer.
These changes come into effect from 1 April 2014:
- The window for enrolling eligible jobholders into an auto-enrolment scheme has been increased from a month to six weeks.
- The period of time within which an employer needs to register their scheme with the Pensions Regulator has been increased from four to five months, and re-registration periods will be two months rather than one month.
The government has also said that it will consult further on other potential changes, such as the potential exclusion of certain categories of worker from the auto-enrolment duty - for instance, those who have declined to join a scheme under 'contractual enrolment', individuals with enhanced or fixed protection (and who would lose those protections if auto-enrolled), individuals approaching retirement, and members who have given notice during a deferral period.
These moves show that the auto-enrolment environment will continue to evolve and (hopefully) become more relevant for both employers and workers.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.