Cyclical automatic re-enrolment

These FAQs are for financial advisers only. They must not be distributed to, or relied on by, customers. They are based on our understanding of current legislation, at the date of publication.

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Overview

Employers have a duty to put their eligible jobholders who are not members of a qualifying scheme back into pension savings periodically (cyclical re-enrolment), or where the break in pension savings was not instigated by the jobholder. The process is similar to automatic enrolment – the employer is responsible for re-establishing active membership of a qualifying scheme for such jobholders. This is called automatic re-enrolment.

There are two types of automatic re-enrolment – cyclical and immediate. Only cyclical re-enrolment is covered here.

Roughly every three years after an employer’s staging date, they must re-enrol their eligible jobholders who opted-out, ceased active membership of the scheme or have been paying contributions below the minimum contribution requirement. Cyclical re-enrolment effectively follows the same process as automatic enrolment, but there are some key differences:

  • Automatic re-enrolment only applies to eligible jobholders who’ve already had an auto-enrolment date with that employer*
  • Postponement can’t be used with cyclical re-enrolment – so if an employee meets the eligible jobholder criteria on the re-enrolment date, they must be re-enrolled with effect from that date.

Employers can do this more frequently than once every three years (for example, an employer might do this on an annual basis), but they’re only required to comply with statutory cyclical re-enrolment once every three years.

* There is one exception to this – an employer may have a re-enrolment duty for a worker who has never had an automatic enrolment date. This only happens when the employer is exempted from the automatic enrolment duty and up to the cyclical re-enrolment date, the worker has never met the eligible jobholder criteria but then is an eligible jobholder for the first time on the cyclical re-enrolment date. Such workers should be assessed for cyclical re-enrolment, despite never having been automatically enrolled.

There is no requirement for employers to write out again to non-eligible jobholders or entitled workers to inform them of their right to opt in/join (as appropriate) on the cyclical auto re-enrolment date.

Employers can choose the date they want to use for cyclical automatic re-enrolment – it can be any date that falls in the six month window that starts three months before the third anniversary of their staging date and ends three months after that anniversary. 

For example, if the employer’s staging date was 1 November 2015, the six month window runs from 1 August 2018 to 31 January 2019 inclusive.  

The date selected by an employer applies to all employees who are being automatically re-enrolled. It’s not possible to choose one date for one section of the workforce and a different date for others – the date selected applies across the scheme to all eligible jobholders who’re being re-enrolled.

It’s important to choose the cyclical re-enrolment date carefully, as the date chosen is also:

  • the date from which active membership must start for those eligible jobholders who are being automatically re-enrolled
  • the joining window start date (the six week period during which automatic re-enrolment must be completed)
  • the start date for the calculation of contributions due to the scheme for those who are being automatically re-enrolled.

Employers will likely also want to consider using a date that:

  • aligns with other key dates in their business calendar e.g. the start of the corporate year
  • avoids clashing with any seasonal peaks in the employee population
  • allows them to avoid having to calculate and pay part period pension contributions – to do this, the employer should choose a re-enrolment date that coincides with the first day of a pay reference period.

No – employers don’t have to assess all their workers. They can exclude:

  • any worker who is an active member of a qualifying scheme that they provide on the cyclical re-enrolment date
  • any worker aged 21 or under on that date
  • any worker who has reached at least the state pension age on that date
  • any worker who has not yet had an automatic enrolment date*. This will be any worker:
    • who has been a non-eligible jobholder or an entitled worker since the start of employment (or staging date, if later) and has never met the eligible jobholder criteria, or
    • who, when they met the eligible jobholder criteria, postponement was used and on the deferral date the eligible jobholder criteria were not met, or
    • who was an active member of a qualifying scheme at their employer’s staging date but has never met the eligible jobholder criteria either whilst an active member or after active membership ceased
    • who is subject to the transitional period for defined benefit and hybrid pension schemes on the cyclical re-enrolment date
    • who is subject to postponement on the cyclical re-enrolment date.

Employers can also exclude workers who meet the definition of ‘qualifying person’ for the purposes of UK legislation on occupational pension schemes and cross-border activities within the European Union. Please refer the Pensions Regulator’s detailed guidance for more information. Here’s a link.

* There is one exception to this – an employer may have a re-enrolment duty for a worker who has never had an automatic enrolment date. This only happens when the employer is exempted from the automatic enrolment duty and up to the cyclical re-enrolment date, the worker has never met the eligible jobholder criteria but then is an eligible jobholder for the first time on the cyclical re-enrolment date. Such workers should be assessed for cyclical re-enrolment, despite never having been automatically enrolled.

Once the employer has assessed the workers they need to assess, those who meet the eligible jobholder criteria must be re-enrolled. However there are times when the employer can exempt some workers and there are other occasions where the requirement to automatically enrol is optional. Whether either applies depends on whether the eligible jobholder meets certain conditions.

An employer may choose whether to automatically re-enrol any eligible jobholder who:

  • opted-out or ceased active membership of a qualifying scheme (or a scheme that would have been a qualifying scheme) at their own request within the 12 months before the cyclical automatic re-enrolment date. (Note: paying contributions below the minimum level does not constitute being an active member of a qualifying scheme, so if a worker reduced their contributions in the 12 months before the cyclical automatic re-enrolment date, the employer may, but doesn’t have to, re-enrol them)
  • has given their employer their notice to end their employment (resignation or retirement) or has been given notice of dismissal by the employer
  • has Primary, Enhanced, Fixed or Individual protection
  • holds the office of Director with the employer
  • is a partner in a Limited Liability Partnership (LLP)which is the employer and is not treated for income tax purposes as a ‘salaried member’.
  • was paid a winding up lump sum within the 12 months before the re-enrolment date whilst in employment with the employer and then during the 12 months period starting on the date the winding up lump sum was made:
    • ceased employment and
    • was subsequently re-employed by the same employer

The Pensions Regulator has more information about the exceptions from the automatic re-enrolment duty in their Detailed Guidance No 1 – Employer Duties and Defining the Workforce, which you can find here (see paragraphs 83 – 118).

If an employer chooses to re-enrol an eligible jobholder who falls into any of these categories, then the normal employer duties must be fulfilled. If not, they have no further duties for these individuals until the next cyclical re-enrolment date, unless:

  • the worker asks to join or opt-in, or
  • the information about the right of a jobholder to opt-in and the right of an entitled worker to join has not yet been given.

Similar rules apply for those workers who don’t meet the eligible jobholder criteria. 

Employers must also re-declare their compliance to TPR stating how they’ve met their re-enrolment duties. This must be done within 5 months of the third anniversary of their original staging date and then within 5 months of the third anniversary of their last re-enrolment date. Employers who have not had to cyclically re-enrol anyone due to only having non-eligible jobholders and/or entitled workers, still have to complete a re-declaration of compliance. 

Subsequent cyclical re-enrolment dates will be a date chosen by the employer that falls within a window that begins three month before and ends three months after the third anniversary of the last cyclical automatic re-enrolment date.

Sometimes, corporate groups can be complex and there may be a number of separate employers with their own different staging dates within the group. If such a group wasn’t able to align the staging dates for the different employers within the group at outset (by using postponement or by bringing some or all staging dates forward), cyclical automatic re-enrolment presents an opportunity to align automatic enrolment duties across the group, which could be desirable.

Here’s an example of how two employers with different staging dates can align their cyclical automatic re-enrolment dates:

Employer A Employer B
Staging date: 1 April 2013 Staging date: 1 September 2013
Cyclical automatic re-enrolment date window:
1 January 2016 – 30 June 2016
Cyclical automatic re-enrolment date window:
1 June 2016 – 30 November 2016

If Employer A and Employer B both chose the same date between 1 and 30 June 2016 as their cyclical automatic re-enrolment date then they have aligned their re-enrolment duties.

In some cases it might take more than one cyclical re-enrolment cycle to achieve alignment. For example:

Employer A Employer B
Staging date: 1 April 2013 Staging date: 1 November 2013
First cyclical automatic re-enrolment date window:
1 January 2016 – 30 June 2016
First cyclical automatic re-enrolment date window:
1 August 2016 – 31 January 2017

There is no overlapping period where Employer A and Employer B can choose the same cyclical re-enrolment date. However, if Employer A picks a date towards the end of their cyclical automatic re-enrolment window (for example, 1 June 2016) and Employer B picks a date towards the start of their cyclical automatic re-enrolment window (for example, 1 August 2016), they should be able to align their cyclical automatic re-enrolment duties at the next cyclical re-enrolment date, as shown:

Employer A Employer B
Previous cyclical automatic re-enrolment date: 1 June 2016 Previous cyclical automatic re-enrolment date: 1 August 2016
First cyclical automatic re-enrolment date window:
1 March 2019 – 31 August 2019
First cyclical automatic re-enrolment date window:
1 May 2019 – 31 October 2019

If both employers choose the same date between 1 May 2019 and 31 August 2019 as their cyclical automatic re-enrolment date then they have aligned their re-enrolment duties.

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