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Clayton & Brewill welcome auto-enrolment simplification proposals

Chloe Hughes, pension auto-enrolment specialist at Clayton & Brewill welcomes recent government proposals to simplify the pension auto-enrolment process.

Nobody said it was going to be easy….

 â€¦ and as we see a rising number of compliance notices given to companies failing to meet their auto-enrolment duties, it seems that the Government is starting to recognise the difficulties that employers are facing.

More than 1.25 million business will go through the auto-enrolment process over the next three years and as smaller firms approach their staging date the Department for Work and Pensions (DWP) has proposed three key changes to reduce the burden on employers. The consultation period closes on 9 January and the changes are expected to come in during April 2015.

Exceptions to employers’ auto-enrolment and re-enrolment duties

The DWP is proposing to make certain employees exempt from being automatically enrolled or re-enrolled into a pension scheme, namely:

•  Employees with a pension pot above the lifetime allowance and who have enhanced or fixed protection.
• Employees who hand in their notice within six weeks of the staging date.
• Employees who have quit the scheme within 12 months.

Reduced and streamlined information for employees

There are also proposed changes to the amount and detail of information that employers have to provide to their staff.

Under the current rules, employers have to send up to five different pieces of information to workers, which creates a heavy administrative burden for the employer as well as being confusing for the employee.

Under the simplification proposals, much of the information will be consolidated into a more generic format that can be used for all employees.

The DWP proposes that employees should receive a minimum level of information that covers:

•  Their right to opt out of the pension scheme, when they can opt out and how contributions might be refunded.
•  Their right to opt in to the pension scheme if they meet the necessary requirements.
•  If the auto enrolment date has been postponed, that they will be enrolledat a later date and have the right to ask to opt in or join in the meantime.

The proposals to streamline the employee information are optional – if an employer has already begun their employee communications they won't be obliged to switch to the new processes.

Simplified quality test for existing workplace pension schemes

The other proposed change of note relates to simplifying the 'quality test' that is applied to existing workplace pension schemes to assess whether or not they meet the standard for a qualifying pension scheme for auto-enrolment.

Specialist help with pension auto-enrolment from Clayton & Brewill

For more information on the how, what and when of pension auto-enrolment – including how to find out your staging date – please visit our dedicated pages.

Alternatively, you can contact Chloe Hughes by email or on 0115 950 3044.