An area that still causes confusion for many when it comes to auto-enrolment legislation is postponement; it is complicated, but a lot of organisations are considering the options it presents.
Here we take you through what it is, and how it can be applied.
Postponement is an additional flexibility for the employer to choose to postpone the assessment for auto-enrolment for a period of up to three months. The employer must give a postponement notice to the respective worker or workers. If the employees are found to be eligible at the end of postponement period they should be auto enrolled at this point.
An employer can chose to use the postponement on certain dates:
- their staging date, in respect of any workers employed on their staging date.
- the first day of employment, in respect of any worker starting employment after the employer’s staging date.
- the date a worker employed by them meets the criteria to be an eligible jobholder after the employer’s staging date.
When & Why Would you Use Postponement?
Postponement gives an employer the flexibility to align the administration of the employer duties to their existing business and payroll processes. An employer could use postponement to:
- smooth the process of staging, e.g. automatically enrol groups of workers at different points in the three-month period.
- align automatic enrolment with their existing payroll processes, e.g. to avoid calculation of contributions on part-period earnings, or to maximise the amount of the opt-out period that falls before payroll is run.
- smooth the process of the automatic enrolment duty in respect of workers with rare spikes in earnings.
- apply the transitional period for defined benefit (DB) and hybrid pension schemes to a worker.
- smooth the process of the automatic enrolment duty in respect of short-term workers who leave soon after starting work, or workers who trigger automatic enrolment just before ceasing employment.
- facilitate contractual joining into a salary sacrifice arrangement.
- smooth the process of fulfilling the information requirements, e.g. use the postpone.
- avoid peak trading periods such as Christmas or summer.
Remember though, during the postponement period the jobholder has the right to opt-in to the pension scheme.
For more information on postponement, take a look at the detailed guidance from the Pensions Regulator: Guidance 3a. Postponement
Ceridian’s Auto-Enrolment Knowledge Centre
A great source for further advice: you can take a look at the FAQ’s from our customers or call us with your questions.
Ceridian Auto-Enrolment Seminars 2013
Attend one of our auto-enrolment events taking place in 2013 to learn more about the legislation or bring your questions along to one of our more in-depth ‘ask the experts’ sessions.