Pension re-enrolment – don’t get caught out

Many businesses are not aware that they have a legal obligation to re-enrol some employees back into a pension scheme every three years, even if they have previously opted out. Not re-enrolling eligible employees could result in some significant financial penalties. Sarah Pownall, payroll manager at Nottingham chartered accountants Clayton & Brewill, explains the requirements to ensure you don’t get caught out.

Sarah Pownall, Payroll Manager, Clayton & Brewill explains pension re-enrolmentWhat is re-enrolment?

Re-enrolment is a the process where you must re-enrol certain employees into an auto enrolment compliant pension scheme,if they are not already members.

Re-enrolment should take place every three years. As part of the process you will also be required to submit a re-declaration of compliance to The Pensions Regulator (TPR) even if you don’t have any employees to re-enrol.

What do I need to do to comply with re-enrolment requirements?

Choose your re-enrolment date – when you approach the three year anniversary of your initial staging date, you have a six month window for re-enrolment. You can choose to re-enrol eligible employees up to three months before or after your enrolment date anniversary.

Assess your employees – you’ll need to assess your employees to see if they meet the criteria for re-enrolment. This includes those who have previously opted-out, those who left the pension scheme under the scheme rules (known as ‘ceasing active membership’), and those whose contributions are below the minimum level required by auto enrolment. It’s worth noting that if any of these events happened in the 12 months leading up to re-enrolment date, you can choose not to re-enrol these employees, however they will need to be re-enrolled at the next re-enrolment date in a further three years time.

Inform relevant employees – it’s important that you write to eligible employees, within six weeks of your chosen re-enrolment date to tell them how re-enrolment applies to them.

Complete and submit a re-declaration of compliance – this needs to be submitted to TPR within five months of your enrolment anniversary date, regardless of whether you have any employees to re-enrol or not.

What’s the difference between ongoing enrolment and re-enrolment?

Whenever you run your payroll you should assess your staff to make sure that you pick up all eligible employees. Changes in age and pay may mean that some employees who weren’t previously eligible have since become eligible for auto enrolment and should be enrolled immediately, this is known as on-going enrolment.
Eligible employees are those:

·      aged between 22 up to state pension age and
·      earning over £10,000 per year (£833 per month or £192 per week)

Re-enrolment is for those who have previously opted out, left the pension scheme or who don’t make the required level of contributions– with exceptions as detailed above.

More information on the eligibility criteria and re-enrolment can be found on The Pension Regulator website.

To find out more about auto-enrolment or re-enrolment, please contact Sarah Pownall. Our payroll team can offer the necessary advice and guidance to ensure you are complying with your required duties.

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