What does "postponement" mean for the purposes of pensions auto-enrolment?
Postponement allows an employer to delay its duty to auto-enrol eligible jobholders for up to three months. For example, the employer may wish to avoid auto-enrolling fixed-term workers who may not be with the organisation for long. Where an employer uses postponement, its duty to assess the relevant worker is postponed to the deferral date. The employer then has six weeks from the deferral date to complete auto-enrolment for the relevant worker.
The employer can apply postponement:
- from the date on which its auto-enrolment duties start;
- to new workers on starting employment; and/or
- when someone becomes an eligible jobholder.
Employers cannot apply postponement when carrying out their three-yearly re-enrolment of staff who have opted out of or left the pension scheme.
If the employer makes use of postponement, it must provide affected employees with a postponement notice, telling them:
- that auto-enrolment has been postponed;
- the deferral date (the last day of the postponement period);
- that, if they meet the eligible-jobholder criteria on the deferral date, they will be auto-enrolled; and
- about the right to opt in to an auto-enrolment scheme for jobholders and the right to join a pension scheme for entitled workers.
The employer must issue the postponement notice no more than six weeks after the start of the postponement period, but it can choose to send it in advance, together with the required information about auto-enrolment or the right to opt in, if it so wishes.
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 them 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.