Postponement is when you make a decision to delay enrolling employees into a workplace pension scheme for up to 3 months.
This could be because you know a member of staff is leaving, or you’ve taken on new or temporary staff, or for administrative reasons.
You can choose to postpone auto enrolment for up to three months.
You can postpone from:
- An employee’s first day of employment
- The date an existing employee first becomes eligible for automatic enrolment
An existing employee must have been assessed previously and written to about their non-eligibility for automatic enrolment.
It’s important to understand that if you decide to postpone from your first employee’s start date, also your duty date, your duty date remains unchanged and you will still be required to file your declaration of compliance with The Pension Regulator within 5 months after this date but only after the first postponement period has ended.
There are several reasons why you might want to postpone. Common reasons are:
- You know a member of staff is leaving
- You take on a new member of staff who is on a probationary period
- You take on temporary or seasonal staff who won’t be with you after three months
- You want to align auto enrolment with your payroll or other business processes
- Some workers occasionally experience a spike in their earnings which would make them eligible to be enrolled
- You want to ease into auto enrolment by enrolling a few staff at a time.
How postponement works
- You can postpone as many or as few staff as you like and the postponement period doesn’t have to be the same length for everyone.
- The postponement period must not exceed 3 months, even if your staff member is still in a contractual probationary period. If they are eligible after the period of postponement they must be automatically enrolled.
- If you’ve already enrolled some staff you can postpone auto enrolment for new employees or employees who subsequently become eligible.
- You can postpone a member of staff more than once provided the periods of postponement are not consecutive.
There’s no need to tell The Pensions Regulator (TPR) if you decide to postpone. But you must write to the employees to tell them that their auto enrolment is being deferred to a later date – known as the deferral date.
If you’re postponing you have to write to your staff within six weeks of:
- Their first day of employment
- The date an employee meets the criteria of an eligible worker.
Your letter must tell them:
- That automatic enrolment has been postponed
- The deferral date
- That on the deferral date, if they meet the criteria, they will be automatically enrolled
If they are non-eligible jobholders they have the right to opt-in and if they’re entitled workers they can join the pension scheme but you don’t have to make contributions.
If you take on a group of seasonal staff and want to postpone auto enrolment, you will need to write to the employees individually.
Once you reach the deferral date you need to assess the employees again. If they are eligible they must be automatically enrolled into a qualifying pension scheme.
If they don’t meet the eligibility criteria on the deferral date then you will need to assess the employee on the first day of each pay reference period going forward. If an employee meets the eligibility criteria in the future, you can postpone again, as long as there is a gap of one pay period in between your deferral date and the date you decide to postpone.
If all of this seems like a hassle – and it is – don’t forget that you can outsource your workplace pension administrative, along with pension scheme set-up to Biznus Payroll.