Automatic enrolment – communicating with employees

This is the fourth in a series of short blogs about automatic enrolment, a new law designed to encourage people to save for their retirement.

1 – When is my staging date?

2 – What about my existing pension scheme?

3 – Registering your qualifying pension scheme

Auto enrolment will require all employers to enrol their employees into a workplace pension scheme, if they are not already a member of a qualifying scheme.

It is designed to overcome the perennial problem of employees not joining their workplace pension schemes when these are offered, simply because they do not sign up to receive these valuable benefits.

Communicating with employees

Once you have identified your staging date, worked out whether your existing pension scheme is qualifying and registered the scheme, you will need to communicate with your employees.

This will involve advising employees on whether they are already a member of a qualifying pension scheme, or alternatively telling them they are not and that they will become subject to automatic enrolment.

A decision will need to have been made about postponement of auto enrolment for up to three months, in order to exclude very short term employees from the assessment of auto enrolment.

Employees will need to be told that they will be automatically enrolled in the pension scheme if certain criteria are met.

You will also need to tell employees they have the right to opt in or, in certain circumstances, to opt out of auto enrolment. Employers must not encourage or induce employees to opt out of auto enrolment; The Pensions Regulator can impose fines on employers if this is discovered.

Another important piece of information is the assessment date and the effective date of automatic enrolment. Once this assessment date has been reached, you will need to tell each employee the result of the assessment.

At this stage, the employer will tell the employee the details of the pension scheme into which they are being automatically enrolled.

This information must include the name and address of the provider, the value of any contributions paid to the scheme and whether contributions will be increased as a result of phasing in of contributions during the introduction of auto enrolment.

Your fourth auto enrolment task is to draw up a communication plan to inform your employees.