Pensions insight
The Pensions Regulator provides guidance What business advisers need to know about postponement
R esearch by The Pensions Regulator has shown that there is now almost universal understanding among business advisers of the tasks that need to be carried out for employers to comply with their automatic enrolment duties. However, an area which continues to prompt questions from advisers is postponement, which is a useful tool for employers, especially those that employ temporary or seasonal workers. Key points about postponement comprise the following: ● An employer can temporarily postpone the assessment of workers for automatic enrolment purposes for up to three months. ● Postponement can be used for all of the employer’s staff or just some of them. ● If a client postpones from their staging date, the staging date does not change. ● If a client chooses to postpone from their staging date, they still have duties (e.g. they must write to tell the staff who will be postponed, within six weeks of their staging date). ● The declaration of compliance date does not change – this remains as five months after the staging date. ● Postponement cannot be used with re-enrolment. If the staff meet the criteria to be enrolled on the re-enrolment date, then re-enrolment must take effect from that date. One of the main reasons clients might decide to postpone the assessment of their workers is if they have temporary or short-term staff (for example, seasonal fruit pickers) who they know will stop working for them within three months. Using postponement can also be helpful when assessing those staff whose earnings would usually fall below the earnings threshold, but where an increase such as a bonus might temporarily take their earnings over the trigger level. If clients apply a probationary period to new starters, then it can be helpful to use postponement to delay assessing these individuals until after their probationary period is passed (assuming it is not longer than three months). Clients might also choose to use postponement in order to align automatic enrolment with their other business
remember, the declaration of compliance date will not change. On the last day of the postponement period the client will need to know whether each staff member, whose assessment they’ve postponed, is eligible to be automatically enrolled – if they still work for them. If they are eligible, the client must put them into a pension straight away. It’s not possible to postpone again. This is true even if the client postponed for less than the three months allowed. However, if any are not eligible, then they will need to be monitored every pay cycle from then on, to see if they become eligible in the future. If they do become eligible, the client could then apply postponement again in respect of them. n Common postponement questions ● C an we use postponement more than once? – Yes, but only for staff who are assessed as not eligible to be automatically enrolled on the last day of the postponement period. Where a member of staff is eligible to be enrolled, you cannot postpone again and you must put them in a pension scheme. postponement period, when do I start paying money into the scheme? – If any member of staff writes asking to join a pension, you need to assess what they have earned and how old they are – in the pay period when you receive the notice that they want to join. Useful links to The Pensions Regulator ● http://goo.gl/7aEBSh – postponement guidance ● http://goo.gl/WqtSkC – AE detailed guidance Q&As If you have any questions about AE that you wish The Pensions Regulator would answer, please submit them to editor@cipp.org.uk. The Q&As will appear in a later issue of this magazine. ● If a member of staff asks to join my pension scheme during the
processes. For example, if the client’s staging date falls in the middle of a pay period, it may be helpful to postpone to the beginning of the next pay period. Clients can postpone automatic enrolment from: ● their staging date (but this doesn’t change their staging date) ● a staff member’s first day of employment ● the date a staff member first becomes eligible for automatic enrolment. The client can postpone for up to three months. They can postpone as many or as few staff as they like and the postponement period doesn’t have to be the same length for everyone. Note that staff can choose to opt in to their employer’s pension scheme during the postponement period. More information on what to do if this happens can be found on The Pensions Regulator’s website here: http://goo.gl/R84hPn. An employer can postpone an individual, or some, or all, of their staff. If they do, they must write to these staff within six weeks of the date that postponement starts, to tell them: ● that their assessment has been postponed ● the end of postponement date, and ● that they have the right to opt in or join a pension anytime. The Pensions Regulator has a sample postponement letter on its website that can be used to write to staff (http://goo.gl/ A9OmTG). There’s no need to tell TPR that a client has decided to use postponement. And ...the postponement period doesn’t have to be the same length for everyone
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Issue 23 | September 2016
| Professional in Payroll, Pensions and Reward |
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