Auto enrolment business clinic: Deferral date complexities

When is three months not three months? With staging dates looming for even the smaller employers, those that have already staged may be feeling a little smug that they have gone through the pain and survived.

Torquil ClarkBy Janine Wilson, chartered financial planner at Torquil Clark.

However no employer can rest on their laurels where auto enrolment is concerned. These duties are ongoing. Once you are past the staging date, they will continue to affect your business plan through new joiner enrolment and not only at the three year re-enrolment window.

Many employers have adopted the three month postponement period for auto-enrolees at their staging date and have budgeted accordingly. Budgeting will also be effected after the staging date in the case of new entrants.

To meet their legal requirements any new monthly paid employees have to be auto enrolled on first month following completion of only two months’ service, unless a part payment is to be made on their behalf for their pension contributions. Furthermore new employees do not need to wait at all.

An employee can request to join straightaway at the first opportunity with the commencement of a new “pay period”.

Frequently employers assume there will be a lead in time before any new entrant starts to make a difference to the running of the business; a time when they will be a cost rather than a contributor. Auto enrolment may just make this worse.

Yet there is a positive side to this early joiner situation for those employers offering salary sacrifice. With auto enrolment requiring defaults, any new contracts of employment offered can confirm that salary sacrifice is the automatic method of payment and thereby employers ensure they harness this from outset. The government is certainly achieving its aim of ”pensions for all” but employers will need to seek advice as to how best to manage all the challenges it presents.