Legislation has been passed which is aimed at simplifying the process of automatically enrolling eligible jobholders into workplace pension saving. Most provisions in the new Regulations came into force on 1 November 2013.

What does this mean?
For those smaller business that have not yet reached their staging date, the changes are of particular importance.

The new legislation makes changes to the current automatic enrolment process by:

  • Providing an alternative definition of a pay reference period for the purpose of assessing whether a jobholder has earnings over the threshold that require automatic enrolment into pension saving. This will allow employers to use a pay reference period aligned with  when the worker is paid;
  • Providing an alternative definition of a pay reference period for the purpose of assessing whether an occupational money purchase or personal pension scheme can be used for automatic enrolment. This will allow employers to align the pay reference period used for determining the quality standard for such schemes with the periods already used by payroll.
  • Introducing consistent contribution payment deadlines for everyone joining a pension scheme. This means that in the future the time limit will be the same for all new joiners, whether the member joined a pension scheme as a result of automatic enrolment or otherwise, such as  under their contract of employment;
  • Clarifying the form and content of the notice jobholders submit if they want to opt out of pension saving.
  • Extending the window employers have to enrol eligible job holders into a pension scheme from one month to six weeks.
  • Implementing minor changes to the quality requirements defined benefit pension schemes have to meet if they are used for automatic enrolment.

What action should employers take?
Employers should familiarise themselves with their obligations well in advance of their staging date and keep an eye out for the updated detailed guidance that the Pensions Regulator is expected to publish shortly.