Postponement

These FAQs are for financial advisers only. They mustn’t be distributed to, or relied on by, customers. They are based on our understanding of current legislation, which may change.

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Legislation allows an employer to postpone the automatic enrolment of workers at the following points:

  • assessing the worker’s category at the employer’s staging date (for workers in the employment at that date), or 
  • at the date the worker joins the employment (for workers not in the employment at the staging date), or
  • the automatic enrolment date of an eligible jobholder (where a worker already employed meets the criteria for automatic enrolment after the staging date e.g. worker turns age 22).

However, postponement cannot be used at automatic re-enrolment.

The postponement can be for up to three months (sometimes referred to as the waiting period). 

It’s important to note that a jobholder who is not an active member of a qualifying scheme can opt in, and an entitled worker can choose to join a registered pension scheme, at any point during the waiting period.

Where assessment for automatic enrolment is postponed for a worker, either at the employer’s staging date or when they start employment after the staging date, the employer doesn’t have to check whether the worker is eligible for automatic enrolment before issuing the postponement notice.

At the staging date, if the employer chooses to use postponement, they can operate postponement for a specific worker, or a section of their workforce, or for all workers.

The waiting period can be any period of up to three months from the starting date. The starting date is:

  • for a worker employed by their employer on their staging date, the staging date (or first enrolment date if the scheme is a defined benefit/hybrid scheme operating a transitional period)
  • for a worker who starts employment with the employer after the employer’s staging date, the date employment starts
  • for a worker employed by the employer who becomes an eligible jobholder after the staging date, the day on which the worker becomes an eligible jobholder.

If a waiting period is to be operated, the employer must provide the worker with a notice (the ‘postponement notice’) in writing (including email), advising that the automatic enrolment date will be postponed until the date detailed in that notice (the deferral date) and providing other prescribed information. A notice can either be generic (where the employer doesn’t know which category the worker is in) or tailored (where the employer has assessed the worker and knows which category they are in).

The postponement notice can be given by the employer on or before the starting date, or within six weeks from the day after the starting date. 

Example

For example, an employer’s staging date is 1 July 2016. The employer decides to use the maximum waiting period of three months from their staging date for all workers employed at that time, so the deferral date is 1 October 2016. The postponement notice has to be given by the employer to these workers by no later than 13 August 2016 (i.e. 6 weeks from the day after the staging date of 1 July 2016).

In all situations where postponement is used, the employer needs to check the status of the worker at the deferral date, assuming the worker is still employed by the employer. This also includes the situation where a postponement notice is issued when the worker first becomes an eligible jobholder after the staging date, because at the end of the waiting period the worker may no longer meet the eligible jobholder conditions.

If on the deferral date the worker qualifies as an eligible jobholder in relation to that employment (and they haven’t already opted in), that person’s automatic enrolment date is the deferral date and they must be automatically enrolled.

If on the deferral date the worker is not an eligible jobholder in relation to that employment, the employer does not have to automatically enrol them, even where the worker previously met the requirements for automatic enrolment at the start of (or during) the waiting period. Of course, if the worker later meets the automatic enrolment conditions again, the employer would have to automatically enrol them at that time (or give them another postponement notice – see below).

Where a worker is given a postponement notice, if they are not an eligible jobholder at the deferral date, a further notice can be given, if they subsequently meet the conditions to be an eligible jobholder.

This further waiting period can also last up to three months and a notice has to be issued no later than six weeks from the day after the day on which the worker meets the conditions to be an eligible jobholder.

At the end of the further waiting period, the employer will have to assess the worker, and automatically enrol them if they meet the eligible jobholder conditions.

However, an employer can’t issue another notice during the waiting period where a worker becomes an eligible jobholder during the waiting period. This means that the waiting period will never be more than three months.

The reasons an employer may wish to use a waiting period may include any one or more of the following:

  • they have a high turnover of staff due to the nature of the business
  • they have a significant number of workers on short-term contracts
  • to stagger the auto-enrolment of a large workforce
  • to ensure all instances of automatic enrolment tie in with the start of a pay reference period (for example, to avoid paying contributions for a part period)
  • to ensure workers who usually don’t have sufficient earnings to be an eligible jobholder, but who may have a pay spike (i.e. a one off bonus), are not automatically enrolled
  • to benefit from up to three months where contributions don’t have to be paid (except if a jobholder chooses to opt in)
  • to facilitate contractual joining into a salary sacrifice arrangement
  • to ensure eligible jobholders who are due to leave employment are not caught by automatic enrolment.

Employers using defined benefit schemes or hybrid schemes as the automatic enrolment scheme can delay automatic enrolment until 1 October 2017 (known as the transitional period), for those workers who are jobholders on the employer’s staging date, provided certain conditions (which are detailed in legislation) are met and continue to be met up to 30 September 2017. The employer is allowed to use a waiting period at the end of this transitional period. Further information about this can be found here.

Further information about postponement, including what must be included in a notice, can be found in the Pensions Regulator’s guidance on Postponement, which you can find here.

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