Postpone to avoid auto enrolment - Myth!
Recently The Pensions Regulator have released figures on the number of businesses that are applying postponement to auto enrolment. TPR explained:
Over the last financial year, approximately half of employers staging have chosen to use postponement. The majority of these were medium sized employers (as they were the ones with a staging date in 2014/15). When they have used postponement, they have almost all elected to postpone for the full three month period.
From July 2012 to March 2015:
- 51.7% (23,704) of employers elected to use postponement, and of these
- 19,095 have used it over the past financial year, representing 54.6% of employers declaring their compliance in 2014/15
In fact, there are a few misconceptions when it comes to postponement of auto enrolment duties. Here are some of the myths that we have debunked to ensure that you don’t become non-compliant!
Myth: Postponement changes or delays my staging date
Truth: Your staging date remains the same and will not change. It will become a marker of one of the occasions that you can start to apply postponement to employees. You will still have other duties that you need to undertake to comply with The Pensions Regulator from your staging date.
Myth: Postponement means I don’t have to do auto enrolment
Truth: Not really knowing where to start with this one, it’s best to first of all explain that this couldn’t be further from the truth. Postponement simply defers the date of which you have to automatically enrol them into a pension scheme to a later time. The length of postponement allowed is between one day and up to three months. The “Deferral Date” is the date on which the postponement ends and you must then comply with the legislation.
Myth: I can just keep extending postponement and never auto enrol anyone
Truth: When you have set a Deferral Date, you must then automatically enrol all eligible employees into a qualifying pension scheme. However, if they are assessed and are not eligible, at the point that they become eligible, they can be postponed again for between one day and three months.
Myth: I can postpone a member of staff whenever I want to
Truth: The only time that you can postpone a member of staff is either on your staging date, on a member of staff’s first day of employment or on the day that they become eligible for auto enrolment (e.g. their 22nd birthday).
Myth: When an employee has been postponed, that is it. No pension for them until their postponement is over
Truth: An employee can freely opt-in or join a pension scheme during the period of postponement if they want to.
Myth: I don’t have to tell anyone that I am postponing someone
Truth: It is true that you do not need to tell The Pensions Regulator (TPR) if you are going to postpone someone however on your Declaration of Compliance, you will be asked what your last deferral date was. You do however need to tell the employee that you have postponed them within 6 weeks and one day from the start of their postponement.
Myth: I don’t need to auto enrol anyone therefore I don’t need an auto enrolment solution
Truth: Postponement means that an employee doesn’t need to be auto enrolled into a pension scheme. It doesn’t mean that you do not then have to still assess them for eligibility and communicate the changes with them. For this, you will need a piece of software to do the work for you. This is because you must continually assess your employees for eligibility and the IRIS AE Suite™ can do this for you.
To find out more about the IRIS AE Suite™ you can visit the product page. The best way for you to see just how the IRIS AE Suite™ can help you not only manage your auto enrolment but also streamline your entire payroll process with electronic payslips and P60s, you can see a free, 1-2-1 product demonstration with one of our auto enrolment experts.