Auto-enrolment postponement: is it right for your business?

What is postponement?

You can delay enrolling some or all of your employees on your company’s workplace pension scheme for up to three months. At the end of this period, your employees should be enrolled on the scheme.

You are also required to let your staff know what you are doing and how auto-enrolment will work for them. Keep on reading about auto-enrolment postponement and how it works. 

When can I delay auto-enrolling my staff?

There are three types of postponement depending on when you delay auto-enrolment from:

  • Company postponement: from your duties start date, meaning when you hire your first member of staff,
  • New Joiner postponement: from a staff member’s first day of work,
  • Eligibility postponement: from the day a worker becomes eligible for auto-enrolment, meaning that they have to be 22 and over as well as earn at least £10,000 per year.

Why would I postpone automatic enrolment?

Postponement of automatic enrolment could work for you for many business reasons.

If you have seasonal or temporary staff who you know will stop working in three months, you could delay enrolling them on the company’s pension scheme. It will give you more time to assess which employees are still with you at the end of postponement and enrol them on the company’s pension plan.

You can also use postponement if your employee is on probation or if you need more time to set up the scheme, as pension setup can be quite complex.

Many businesses choose to postpone in order to align auto-enrolment and payroll processes. If it suits your business and you qualify, you can postpone your automatic enrolment too.

How do I use postponement?

If you qualify to delay enrolling your staff on a pension scheme, you can:

  • Choose who to postpone.

This can be one employee, a group of them or all of them.

  • Choose how long to postpone your chosen employees.

You can choose how long to delay auto-enrolment for your chosen employees. It can be a week or a month, and it doesn’t have to be the same length for all employees. It is important to know that you can only postpone for three months.

  • Let your staff know that you’ll delay enrolling them on a workplace pension.

You must let your staff know that you are delaying their enrolment. You must write to them individually within six weeks of postponing their pension.

Here is a postponement letter template.

If any of your employees ask to enrol on a pension scheme during postponement, you are required to do so immediately and fulfil your pension obligations.

  • Assess your staff.

After the postponement period is complete, you need to assess your employees and enrol them on the company’s workplace pension, if they qualify. If they don’t qualify for automatic enrolment, you can postpone their pension again. For employees that qualify for auto-enrolment, you are required to contribute to their pot.

You cannot apply for further postponement even if you postponed for one month instead of the maximum of three months.

Making workplace pensions work better for you.

Auto-enrolment pensions and Salary Exchange are set up and taken care of for you.

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Husky can help

We help employers and employees understand workplace pensions better and we take care of the whole pension administration, including postponement. We strive to simplify pensions not only through our award-winning pension solution but also by sharing our expertise and knowledge on pensions for employers and employees.

We want to make workplace pensions work better for you. Contact us to find out how we can help you here.

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