Using postponement for auto-enrolment
Postponement lets you delay assessing your staff for auto-enrolment for a limited amount of time.
How can I use postponement?
You can delay assessing and automatically enrolling your employees for up to three months. The length of time you postpone for is known as the postponement period.
Postponement can begin:
- On your staging date
- On the first day of employment.
- If an employee turns 22 or their earnings increase to meet the minimum earnings threshold for automatic enrolment.
You do not need to let The Pensions Regulator or your pension provider know if you’re using postponement, but you do need to write to the affected employees to inform them six weeks’ from the start of the postponement period.
It’s important to note that employees who have their assessment for auto-enrolment postponed still have the right to opt into your workplace pension scheme during the postponement period.
Postponement can be used for one employee, a group of employees or an entire workforce.
Why would postponement be used?
Postponement can give you additional flexibility to auto-enrol your employees at times that are better aligned to the needs of your business.
When employing staff on short term contracts
Postponement can be used to avoid auto-enrolling employees who are hired on temporary contacts (if you’re employing them for less then three months).
Example: Steph, aged 23, is hired on a temporary contract
Steph is 23 and has a temporary contract to work as an assistant manager at Mac’s, a tailors, from July until September whilst another staff member is on leave. Before tax, Steph earns £1,400 per month, enough to trigger auto-enrolment into Mac’s workplace pension scheme. Mac’s decide to postpone assessing Steph for auto-enrolment until the end of her temporary contract. During this time, Steph could still opt in if she wished to.
Steph’s contract ends in September and she leaves Mac’s. Mac’s no longer need to assess Steph for automatic enrolment at the end of the postponement period in October.
When employee earnings fluctuate
If your employees earnings fluctuate meaning they’re temporarily eligible for auto-enrolment, you may choose to postpone their assessment until their earnings are more reflective of their annual salary.
Example: Lucy, aged 25, has earnings that fluctuate
Lucy is 25 and started working at Silhouette, a hairdressers, on the 1st December. She often earns less than the £833 per month needed to trigger auto-enrolment into Silhouette’s workplace pension scheme. However, Lucy works a lot of extra shifts in the run up to Christmas, meaning that her earnings are higher than normal.
Silhouette decides to use postponement and sends Lucy a postponement notice. She doesn’t exercise her right to opt in to the pension scheme. Lucy is then assessed in the New Year, when her earnings are lower and don’t trigger auto-enrolment. Lucy is still able to opt in to the pension scheme if she wants to.
To align starting auto-enrolment with pay periods
You can use postponement to avoid calculating and making contributions for part of a pay period, if your staging date falls in the middle of a pay period.
Example: Ben, aged 36, starts his new job part way through the pay period
Ben is 36 and has just started a new job with GlobeInc where he earns £32,000 per year. He starts his employment on the 19th September. Because his employment starts part way through the month, his earnings wouldn’t be enough to trigger automatic-enrolment into GlobeInc’s pension scheme.
GlobeInc decides to use postponement. They issue Ben with a postponement notice on the 19th September informing him that he will be assessed for automatic-enrolment on the 1st October, the start of the first full month of employment for GlobeInc’s pay period. Ben doesn’t exercise his right to opt-in and he is assessed for auto-enrolment at the beginning of the following month. Ben’s full earnings make him eligible to be auto-enrolled.
When employees have a probation period to work through
If you employ staff for a probationary period before they start work on a permanent basis, you may choose to postpone auto-enrolment until the probationary period ends providing that the probationary period is no longer than three months.
Example: John, aged 43, starts a new job on a trial period
John starts working at Brooks, an estate agents, on the 3rd March. Before he is given a permanent contract of employment, John has to work through a two month probationary period. John is 43 and earns £30,000 per year, which would be above the minimum earnings threshold to trigger auto-enrolment into Brooks’ pension scheme.
Brooks decide to postpone auto-enrolling John until they know if they will employ him on a permanent basis. Brooks issue John a postponement notice. John doesn’t exercise his right to opt-in. In September, when the probationary period ends, Brook’s decide to employ John on a permanent basis. The postponement period has ended and he is then assessed for automatic enrolment. John is auto-enrolled and he decides to stay in the pension scheme.
How does postponement work?
- 1. Decide on your postponement date.
- 2. Issue a postponement notice.
- When you issue a postponement notice, it will need to let the employee know that automatic enrolment has been postponed and the date that they will be assessed. It must tell employees the criteria by which they’ll be assessed for automatic enrolment and let them know that they have the right to opt-it before their assessment date.
- 3. Assess your staff when the postponement period ends.
- Once the postponement period ends, your staff will need to be assessed and all eligible jobholders must be auto-enrolled. If an employee is eligible for automatic enrolment, further periods of postponement cannot be applied.
How often can I use postponement?
There are instances where postponement can be used more than once for the same employee. If an employee has fluctuating earnings they may not assess as an eligible jobholder after the first postponement period. When their earnings next spiked to hit the minimum earnings threshold for auto-enrolment, you would be able to use postponement again.
Every three years from your staging date, you will have to perform re-enrolment. This involves reassessing and re-enrolling any employees who have left the pension scheme that are eligible to be auto-enrolled. You can choose the date you run your re-enrolment process, within a window that opens 3 months before and closes 3 months after the 3rd anniversary of the staging date. The ability to choose the date in this way replaces the ability to postpone re-enrolment.