Gov’t to extend auto-enrolment notification

Employers will now have more time to notify their employees about auto-enrolment, following a 12-week industry consultation on the workplace pension reform.

According to the department for work and pensions, the time period within which employers must notify workers about their right to opt out of a company pension scheme has not changed - it remains at a period of one month beginning with the auto-enrolment date.

However, the change is the time period within which employers must notify workers about a waiting period and their right to opt into a company pension scheme, which has been extended from one week after the employer’s staging date to one month. The waiting period runs for up to three months. The employee is then automatically enrolled on the last day of the waiting period.

Feedback from the consultation, which received 59 formal responses, has also led the government to extend the validity period of certification to 18 months from 12 months.

It will also abolish the ‘Person A’ test, included in initial legislation, to stop people who experience unusual pay spikes from being auto-enrolled if they normally would earn too little to qualify.

Steve Webb, the pensions minister said: “These regulations provide key legal requirements and guidance to help employers start enrolling their staff later this year. Auto-enrolment can now begin and start a much-needed seismic shift in pension saving in this country.”

The changes followed an announcement in November last year that smaller employers will be given more time to comply with the new legislation.

A revised timetable for auto-enrolment was later published on 25 January setting out the final staging dates.

Alongside the government’s response to the consultation, it has also published guidance on how employers can certify pension schemes

The guidance is for employers and their advisers and explains how they can use certification to ensure their existing pension schemes qualify for automatic enrolment.

Allan Maxwell, director for Glasgow-based Corporate Benefits Consulting, said: “Abolishing the Personal A test was a sensible move. On the time-frame, knowing how employers work this is not their priority so giving them sufficient time is very important. If it is as short as a week, the chance of a small business missing the deadline is highly likely. It is good to get these things ironed out in advance, rather than creating absolute mayhem during the process.”