The point at which your firm is expected to meet these requirements, called your staging date, varies according the number of people you employed on 1st April 2012. Auto enrolment has been gradually rolled out first to larger organisations and now increasingly to smaller firms by February 2018.
Employers are responsible for making sure their employees are brought into workplace pensions at the right time and that contributions are deducted correctly. Failure to do so may result in enforcement action from the Pensions Regulator and they can issue a notice and or a penalty.
The Pensions Regulator has made provisions for you to postpone your staging date for up to three months for some or all of your staff, subject to certain conditions.
Reasons for Auto Enrolment Postponement
The most common reason will be you are simply not ready and need more time to integrate the new processes into your systems. This is understandable given the potential complexity of process changes and the need for new technology.
You may also want to shift your staging date to lengthen the time between when you assess an employee and when you have to make deductions; or you may want to align the auto enrolment date with your existing systems.
An administrative reason to move your staging date might be to align your contributions to your pay roll run. For example if you start in the middle of a pay period your employee may not earn enough to qualify for auto enrolment during the first pay period, which means you’ll have to put it off until the following period.
You can therefore postpone auto enrolment until the end of the next pay day at which point your employee will have built up enough earnings to qualify for auto enrolment. This makes everything somewhat simpler and avoids the mess of having to send out two separate notices – one telling them that they are not entitled to auto enrolment and the other telling them that they are.
Disadvantages of Auto Enrolment Postponement
While postponement may seem an easy option, the old adage that of putting off until tomorrow what you can do today holds some truth as you could find yourself facing a number of costs as a result.
The effect on staff morale of a significant postponement is a less tangible, but equally real. When you postpone assessment you are obliged to send the employee a notice explaining that you have decided to postpone, and that could erode trust between you and your staff.
Equally, even if you do decide to postpone assessment, your employee still has the right to ask to save into a workplace pension plan. When this happens you will have to continue paying employer contributions from your prescribed staging date.