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How does Auto Enrolment Postponement work?

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You can choose to postpone automatic enrolment for up to three months for some or all of your staff. You must write to your staff to tell them you’re postponing automatic enrolment for them. One of the times you can postpone is from your staging date.

Key points

  • You can postpone automatic enrolment for up to three months from certain dates.
  • If you postpone from your staging date, your staging date does not change.
  • If you choose to postpone from your staging date, you must write to tell the staff who will be postponed within six weeks of your staging date.

Why Postpone?

  • Its unlikely that your payroll processing period will match your staging date, most staging dates are the 1st of the month but many payrolls are weekly, it makes sense to start auto enrolment on a pay processing date
  • If you have short term staff or you are a temp agency you will probably postpone in order to avoid unnecessarily assessing staff who will leave within the postponement period
  • You may also postpone to reduce auto enrolment pension payments and admin
  • You can choose any business reason

When can you postpone?

You can only postpone automatic enrolment from:

  • your staging date
  • a staff member’s first day of employment
  • the date a staff member first becomes eligible for automatic enrolment.

If you postpone from your staging date, it doesn’t change your staging date.

Staff whose automatic enrolment you’ve postponed can choose to opt in to your pension scheme during the postponement period.

The Pension Regulator has further details

Don’t mess this up, if you don’t get postponement right…..

  1. You will get a Warning
  2. Followed by a penalty of £400
  3. Followed by fines of £500 to £2,500 per day (depending on the number of employees)

Even the smallest business will get fines of £50 per day!

steve@bicknells.net

You will initially be given a warning, which will be followed by a fixed penalty of £400. Not too severe so far, but then the penalties shoot up for those companies who still fail to comply.

If you employ between 50 and 249 employees the fine for on-going non-compliance is a whopping £2,500 per day. For businesses with fewer employees, between five and 49 the penalty is still £500 per day and even the smallest of businesses will be fined £50 per day.

– See more at: http://www.investmentsense.co.uk/automatic-enrolment-6-reasons-why-auto-enrolment-shouldnt-be-treated-like-your-tax-return/#sthash.KVkekovC.dpuf

Will Temp Agencies avoid Auto Enrolment by using Postponement?

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The date workers are enrolled depends on the size of the company they work for and is being rolled out over the next six years (this is called a staging date).
  • Large employers (with 250 or more workers), have started automatically enrolling their workers and will continue to February 2014 (some employers may choose to start earlier)
  • Medium employers (50 – 249 workers) will have to start automatically enrolling their workersfrom April 2014 to April 2015
  • Small employers (49 workers or less) will have to start automatically enrolling their workers from June 2015 to April 2017
  • New employers (established after April 2012) will have to start automatically enrolling their workers from May 2017 to February 2018
  • Employers who chose to use Defined Benefit or Hybrid Schemes can delay their staging date until 30 September 2017

You can postpone the start of Auto Enrolment for up to 3 months and then re-test for eligibility using this method could mean that Temporary Staff Agencies could avoid Auto Enrolment for their temps. This also means that many agencies will use NEST because other pension schemes will not want to sign them up as they many not actually receive any contributions.

Pinsent Masons blogged:

Agency workers are different from other workers and so present particular challenges. Many are seeking work for only a short period. Many will register with a number of different agencies and will, in fact, only be ’employed’ by a particular agency for a short period. The auto-enrolment obligation applies to all workers who meet the age and earnings thresholds, but there are options which may assist those employing high churn groups of workers.

Employers can make workers wait up to three calendar months before enrolling them into a pension scheme. If the worker has left by the end of that three-month period, then there is no need to provide that worker with a pension.

If you do postpone, make sure you follow the rules otherwise there could be harsh penalties under the Pension Act 2008 Section 45

Offences of failing to comply(1)An offence is committed by an employer who wilfully fails to comply with—

(a)the duty under section 3(2) (automatic enrolment),

(b)the duty under section 5(2) (automatic re-enrolment), or

(c)the duty under section 7(3) (jobholder’s right to opt in).

(2)A person guilty of an offence under this section is liable—

(a)on conviction on indictment, to imprisonment for a term not exceeding two years, or to a fine, or both;

(b)on summary conviction to a fine not exceeding the statutory maximum.

steve@bicknells.net

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