The Government has proposed a series of changes to automatic enrolment regulations designed to make the reforms less burdensome for small and medium-sized firms.
The simplification programme, announced by pensions minister Steve Webb in January, is designed to implement the “lessons learnt” from the early stages of auto-enrolment.
The Department for Work and Pensions says it wants to make it easier for employers to use existing payroll processes to check whether a worker is eligible for auto-enrolment.
It has proposed adding a new way of determining a “pay reference period” – the period of time an employer uses to check whether an employee is eligible for auto-enrolment – to make it easier for firms to use their existing payroll systems to assess workers’ earnings.
The DWP is also looking to simplify the rules for companies who have not reached their auto-enrolment staging date but already automatically enrol their workers into a pension scheme which meets minimum standards set by Government.
At the moment if an employee chooses to opt out of such a scheme the employer would be required to re-enrol them when their auto-enrolment staging date arrived.
The DWP has proposed introducing an exclusion from auto-enrolment in respect of workers who have voluntarily left one of these schemes within 12 months of the employer’s staging date. Under this proposal the employer would still be required to re-enrol the employee after three years.
In addition, policymakers are considering extending the “joining window” – the period of time after an employer’s staging date during which they must ensure all eligible workers are enrolled and issued with enrolment information – from one month to six weeks.
The Government is also considering excluding workers with enhanced or fixed protection from auto-enrolment altogether. If these people were auto-enrolled and made a pension contribution they would lose their protection and could be hit with a huge tax charge from HMRC.
The consultation closes on 7 May and the DWP plans to bring in the changes in April 2014.
Webb says: “We promised we’d listen to those employers who were first to automatically enrol their staff into a workplace pension.
“These proposals are to make sure that parts of the legislation work better and are more user-friendly. We are also asking for suggestions on how we could recognise the best employers.
“Employers and our partners in the pensions and payroll industry have made a major contribution in delivering these landmark reforms. We want to build on this as medium-sized employers prepare to automatically enrol their staff into a workplace pension.”
You can read the full DWP consultation here.