One of the key employer duties under automatic enrolment is to provide certain information to workers. All employers will have an obligation to provide specified information to their workers within prescribed time limits. For example, employers must give information to eligible jobholders who are being automatically enrolled. This information must include details of what automatic enrolment means for them, their right to opt out and opt back in and where they can find further information about pensions and savings for retirement. Employers must provide this information by no later than six weeks after the eligible jobholder’s automatic enrolment date. All information under the employers’ information duty has to be provided in writing, which can include sending information by email, but will not include merely putting information on a company intranet or noticeboard. The information to be provided in writing to a worker must be direct, for example via a letter, email or payslip message. It must be personalised (e.g. Dear Mr Smith) for workers who are not already Scheme members, but can be non-personal (e.g. Dear Member) for employees already in the Scheme.
If an employee has a number of separate jobs, they may contribute for one, some or all of the jobs and opt out of those they do not wish to pay pension for. They will need assessed separately for each job when defining what category of worker they are in relation to that employment.
The Pension Regulator’s detailed guidance no. 2, paragraphs 67 – 69 state that if an employer has multiple contracts with the same individual, they will need to consider if the totality of those contracts constitutes a single employment relationship with the worker. The employer may wish to consider taking appropriate advice, if they are unsure.
Where the employer considers that a single employment relationship exists, they will need to treat all contracts as one employment. If this is not the case, they will need to treat each contract separately.
Employers will need to make a judgement on whether the contracts are separate or should be aggregated for automatic enrolment. They may wish to consider taking legal advice if unsure. From our experience if a member has more than one job and has a contract for each employment so that they could stop one and continue in another, that would not constitute a single employment relationship. Additionally, if a member could be made redundant in one job, but continue in the other job(s) it is unlikely that this could be considered a single employment relationship. In these cases the member will have multiple Scheme membership records.
If employers are satisfied that each job is entirely dependent on the other, and the roles could not be carried out by two separate employees, then perhaps this might indicate a single employment relationship and the member would only have one record in the Scheme.
Employers are required to automatically re-enrol eligible jobholders who previously opted out of the pension scheme every three years. This is designed to ensure that jobholders who have opted out are forced to reconsider their decision on a regular basis. Once re-enrolled by their employer, a jobholder can choose to opt out of the scheme again each time.
Once automatically enrolled, the employee is entitled to opt out of the Scheme any time they want to. There is an opt out period of three months from entry (or three months from the date on which they are provided with statutory information about their enrolment) within which jobholders will be entitled to a refund of their contributions. If the employee opts out within this timescale then both the employee and employer contribution must be refunded, and the employee put in the same position as if they had never joined the Scheme.
Jobholders can choose to cease membership of the Scheme at any stage, but they will not be entitled to a cash refund of contributions after the end of the three month opt out period under the automatic enrolment regulations. Instead they will retain the benefits they have built up in the Scheme to that date but will not build up any further benefits. In these cases neither the employer nor the employee contributions would be refunded.
However, under Scheme rules if a member leaves with less than two years’ total membership, and has not brought a transfer into the Scheme, they may take a refund of their contributions, less any deductions for tax and the cost of buying back into the State Second Pension Scheme.
A secondee will usually remain a worker for the employer from whom they are seconded and that employer will continue to pay them and send a bill the body to which they are seconded. In that situation it is the employer who has seconded the employee who will remain responsible for the automatic enrolment duties under the Pensions (No.2) Act (Northern Ireland) 2008 (not the body to whom the individual has been seconded). If, instead, the new body becomes the employer during the period of the secondment, then they will become responsible for the employer duties under the Pensions (No.2) Act (Northern Ireland) 2008 in relation to that individual (in line with their duties to their other employees).
We already enrol everyone on joining automatically. Do we still need to enrol staff who opted out before our staging date?
If an employer is using contractual enrolment, workers will be enrolled under the contract of employment. Once an individual enrolled via contractual enrolment ceases active membership however, the normal employer duties begin to apply – to monitor age and earnings, and auto enrol as appropriate. These duties commence at staging date so if the person is not an active member at staging date, but meets the criteria for eligible jobholder, you would have to automatically enrol. Exemptions from automatic enrolment are listed here.
From 6 August 2015 there are exemptions from automatic enrolment for those who have tax protection against the lifetime allowance tax charge e.g. primary protection, enhanced protection, fixed protection 2012, fixed protection 2014, individual protection 2014, and from 6 March 2017; fixed protection 2016, or individual protection 2016.
Where a Scheme employer uses an agency worker who is paid by the Agency, the Scheme employer has no duties under the Pensions (No.2) Act (Northern Ireland) 2008 in relation to that agency worker. Where the agency is the employer for automatic enrolment purposes, the automatic enrolment duties fall on the agency and will apply to the agency worker from the agency’s staging date and not the hirer’s staging date.
An employee cannot opt out under automatic enrolment rules until they have been automatically enrolled as an eligible jobholder. This does not mean that contributions have to be collected from pay before they can opt out. An employee cannot sign and date the opt out form until on or after the day they are automatically enrolled or the date on which they have received the automatic enrolment information, whichever is later.
Do employers need to obtain employees’ consent for them to join a qualifying automatic enrolment pension scheme?
No. A key feature of the automatic enrolment provisions is that eligible jobholders must be automatically enrolled into a qualifying scheme and that no conditions of entry can be imposed. Automatic enrolment is compulsory, although jobholders may choose to opt out of the scheme once they have been enrolled. Eligible jobholders must not be required to provide information to join a scheme or sign an application form.
Exemptions from automatic enrolment are listed here
Under the automatic enrolment regime a member cannot obtain an opt-out form from their employer. The opt-out form can only be available from NILGOSC. Members may download the opt-out form from the NILGOSC website or request an opt-out form by telephone or by email.
The opt-out form is in two parts: the request to the employer to opt out and a NILGOSC monitoring section. The member must return the first part, the opt-out request, directly to their employer and the second part, the monitoring section, should be returned directly to NILGOSC. The opt-out request may be emailed to the employer.
Can an employer postpone automatic enrolment duties on multiple occasions in relation to the same worker?
Postponement allows an employer to delay duties for eligible jobholders for up to three months. The employer can apply postponement:
- to existing workers on the staging date;
- to new workers on starting employment after the staging date; and/or
- when someone becomes an eligible jobholder after the staging date.
An employer can use postponement again the next time duties are triggered in relation to a worker, as long as he or she is not an eligible jobholder on the deferral date (the last day of the postponement window).
For example, an employer applies a three-month postponement period, with a deferral date of 31 January, to a worker because a period of overtime in November took his qualifying earnings over the earnings threshold, triggering automatic enrolment. On 31 January the employer reassesses the worker, who has not been paid for any overtime in January; qualifying earnings do not exceed the monthly qualifying earnings threshold so he is not an eligible jobholder. The worker is paid a bonus in February, which again triggers auto-enrolment. The employer can apply postponement again for up to three months.
There is no limit to the number of times that an employer can apply postponement.
Yes, if an employee opts out they can re-join at a later date if they wish. Employers will also have a duty to automatically re-enrol all eligible jobholders who are not already members approximately every three years. An employee who re-joins after opting out cannot choose to combine their old and new benefits.