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21 Oct 2013

Auto-Enrolment Rules Undergo Revision After Consultation

The UK government has recently announced that the window for employers to automatically enrol employees into a pension scheme has been extended to six weeks, from one month previously. There will also be a number of technical changes intended to make it easier for smaller companies to add staff into occupational pension schemes.

As a result of a recent consultation, changes to pension schemes will also see the deadline for employers to inform individuals on their rights under auto-enrolment extended to six weeks, the Financial Adviser reports.

According to the consultation, which was initiated by the Department of Work and Pensions, many of the respondents broadly criticised the existing approach taken to auto-enrolment. They highlighted its failure to align with any period used in payroll calculations, which in turn posed an additional administrative hindrance for employers.

Pensions minister Steve Webb said that the changes are aimed at building on the success of the reform, which took effect in October 2012. Now that medium-sized companies are getting ready for automatic enrolment, these amendments are expected to streamline the process and facilitate employers´ work in meeting their obligations, he added.

Among the approved changes to the auto-enrolment process is also allowing companies to use alternative definitions of pay reference periods for both evaluating an employee status, and specifying whether a scheme is a qualifying scheme. Employers will be also allowed to adjust the extended deadline for registration and postponement notices so they suit the longer joining window. Under the amendments, the new deadline for passing worker contributions to a scheme will apply to all new employees that join a pension scheme, including contract joiners.

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