Under autoenrollment rules, all eligible workers must be enrolled into a workplace pension scheme. However, as we have discussed in previous insights, different workplace pensions providers take different approaches to how they can support employers and members.

Setting up a new pension and enrolling staff can cause a considerable headache for companies which have a seasonal or temporary workforce; therefore, employers can choose to delay enrolment into a pension scheme for up to three months under postponement rules.

This week’s insight looks at the postponement rules and how postponement is managed by workplace pension providers.

When would an Employer want to use postponement?

  • Employers may want to delay enrolment into a pension scheme for staff who begin work on a probationary period.
  • For employers with a large seasonal/temporary workforce
  • A high staff turnover whose employees may not work for the employer for more than three months.

Postponement can also prove useful when first setting up a workplace pension scheme. A range of postponement periods can buy an employer time to assess which of their employees is eligible for automatic enrolment rather than having to assess them all at once.

Postponement is also often used for administrative purposes. It can allow employers to smooth the administration of their employer duties and align it with their existing business processes, such as ensuring all instances of automatic enrolment tie in with the start of a pay reference period. It can also be used to avoid calculating pension contributions on part month earnings.

However, an employer can choose to use postponement for any business reason they chose and does not have to check whether the worker is eligible for automatic enrolment before issuing the postponement notice.

Under current postponement rules, an employer can postpone automatic enrolment into a workplace pension for three months from:

  • The duties start date,
  • An employee’s first day, or
  • The date at which an employee first meets the age and/or earnings criteria to be enrolled into a workplace pension scheme.

If an employer chooses to postpone from their duties start date, it only changes the day on which they need to assess their employees. It does not change the duties start date or the declaration of compliance deadline.

Employers can also only use postponement within six weeks of the date that the employee met the criteria to be enrolled into a workplace pension scheme.

To use postponement, an employer must write to every employee individually to tell them that you have delayed working out how automatic enrolment applies to them. The letter does not have to include a reason why the employer has chosen to use postponement but does need to inform them they have the right to opt in before the deferral date. This must be done within six weeks from the date at which postponement starts.

These letters, otherwise known as postponement notices, can take various forms.

  • A General notice (notice A and B) can be used where employees have not yet been assessed. It tells employees what will happen on the postponement date depending on the type of employee they are.
  • A Tailored notice (Jobholder or Entitled Worker) is typically used where an employee has already been assessed. It gives information that is specific to the type of employee they are an explains what will happen on the postponement date.

Our data shows that although all workplace pension provider systems can generate postponement notices from their systems, not all providers are able to support all four types of notice.

As can be seem on the table below, two thirds of providers generate postponement notices online/electronically. The remaining third of workplace pension provider systems generate postponement notices via a paper hard copy – namely Fidelity, Legal & General and Standard Life. All providers systems, bar Hargreaves Lansdown, can also store postponement notices.

The second part of this insight will look closer are the various types of postponement notices and how providers can identify and support different postponement periods.