Why might an employer want to postpone pensions auto-enrolment for some or all of its workforce?
The use of postponement can assist employers to stagger or delay their auto-enrolment duties, or to avoid auto-enrolling certain workers who would not be eligible if assessed on a different date. For example, an employer may want to use postponement:
- to avoid auto-enrolling, and therefore the cost of pension provision for, fixed-term or casual workers who may not be with the organisation for long;
- to avoid auto-enrolling low-paid workers who have a spike in earnings such as the payment of overtime, commission or an annual bonus at the relevant time and who would not otherwise be eligible for auto-enrolment;
- to align an auto-enrolment date with the start of the next pay period rather than pro-rating contributions from a worker's 22nd birthday to the end of the pay period;
- to avoid auto-enrolling workers near the end of the tax year when opt-outs and refunds will mean that the previous tax year's figures, and potentially national insurance records, need to be adjusted; or
- to spread mass auto-enrolment at staging to manage volumes and ensure that the six-week auto-enrolment deadline is met.
Employers should be aware that a worker can voluntarily opt in during the postponement period and this overrides any decision that the employer has made to apply postponement. If this happens, the employer will need to follow the normal assessment and enrolment process for the opting-in worker. If the worker qualifies, the employer will be required to enrol him or her into a qualifying pension scheme from the enrolment date, which in these circumstances will generally be the first day of the next pay reference period after receipt of the opt-in notice.