Changes to Auto Enrolment Rules
The government has announced it will be implementing a number of changes to auto enrolment rules. The changes are being made following the consultation by the DWP on technical changes to auto enrolment legislation earlier this year. The consultation sought views on proposals to simplify the auto enrolment process without having to make any changes to the primary legislation.
One of the key changes made by the Department of Work & Pensions (DWP) is an increase in the automatic enrolment joining window from one month to six weeks. The time frame for employers to provide information to individuals on their opt in and joining rights has also been extended to six weeks.
The changes are being made following the consultation by the DWP on technical changes to auto enrolment legislation earlier this year. The consultation sought views on proposals to simplify the auto enrolment process without having to make any changes to the primary legislation.
Steve Webb, the Minster for pensions said: “One year in, we want to build on this success as medium-sized employers prepare to automatically enroll their staff into a workplace pension. These changes are aimed at streamlining the system and making it easier for employers to meet their duties.”
While large firms have been through the auto-enrolment process, it is generally accepted the small and medium sized employers face a bigger challenge as they not likely to be as well resourced.
Dave Gleeson, a Chartered Financial Planner at Moore and Smalley LLP, welcomed the DWP amendments. He says: ‘the changes should make it somewhat easier for employers to meet their obligations, as they give more flexibility around earnings definitions, contribution payment deadlines and providing information to employees.’
The drawback with making these changes is that both pension and payroll providers who have developed support solutions over the last few years will have to adapt their systems to take into account these changes.
Other auto enrolment rule changes announced by the DWP are:
- Alternative definitions of pay reference periods for assessing jobholder status and to determine if a scheme is a qualifying scheme
- the deadlines for registration and postponement notices fit with the extended joining window
- the extended deadline for passing worker contributions to a pension scheme applies to all new joiners (including contract joiners)
- opt out notice provisions make clear that schemes can customise their notices
- there is greater clarity and consistency concerning the requirements for defined benefit test schemes in relation to the appropriate age, service limits and revaluation that apply in those schemes
The majority of these changes will be implemented as of 1 November 2013 with those on the joining window and registration deadlines coming into force from 1 April 2014.