Postponement is when you make a decision to delay enrolling employees into a workplace pension scheme.
This could be because you know a member of staff is leaving, or you’ve taken on new or temporary staff, or for administrative reasons.
You can choose to postpone auto enrolment for up to three months.
You can postpone from:
- Your staging date (the date by which you need to have a workplace pension in place)
- An employee’s first day of employment
- The date an employee first becomes eligible for automatic enrolment
It’s important to understand that if you decide to postpone from your staging date, your staging date stays the same.
You must also carry out your duties to assess your workforce, even if you plan to postpone auto enrolment.
There are several reasons why you might want to postpone. Common reasons are:
- You know a member of staff is leaving
- You take on a new member of staff who is on a probationary period
- You take on temporary or seasonal staff who won’t be with you after three months
- You want to align auto enrolment with your payroll or other business processes
- Some workers occasionally experience a spike in their earnings which would make them eligible to be enrolled
- You want to ease into auto enrolment by enrolling a few staff at a time.
How postponement works
- You can postpone as many or as few staff as you like and the postponement period doesn’t have to be the same length for everyone.
- You can use postponement on your staging date to delay automatic enrolment for some or all staff for up to three months.
- If you’ve already staged and enrolled some staff you can postpone auto enrolment for new employees or employees who subsequently become eligible.
There’s no need to tell The Pensions Regulator (TPR) if you decide to postpone. But you must write to the employees to tell them that their auto enrolment is being deferred to a later date – known as the deferral date.
If you’re postponing you have to write to your staff within six weeks of:
- Your staging date, if you’re using postponement from your staging date
- The first day of employment, if you are postponing an individual employee or group of employees
- The date an employee meets the criteria of an eligible worker.
Your letter must tell them:
- That automatic enrolment has been postponed
- The deferral date
- That on the deferral date, if they meet the criteria, they will be automatically enrolled
If they are non-eligible jobholders that they have the right to opt in and if they’re entitled workers they can join the pension scheme but you don’t have to make contributions.
If you take on a group of seasonal staff and want to postpone auto enrolment, you will need to write to the employees individually.
TPR has a template for a postponement letter to send to staff.
Once you reach the referral date you need to assess the employees again. If they are eligible they must be enrolled into the pension scheme.
If they don’t meet the eligibility criteria on the deferral date then you will need to assess the employee on the first day of each pay reference period going forward. If an employee meets the eligibility criteria in the future, you can postpone again, as long as there is a gap of one pay period in between your deferral date and the date you decide to postpone.
If all of this seems like a hassle – and it is – don’t forget that you can outsource postponement, along with pension set-up and ongoing management, to your payroll bureau.