Guide Cyclical automatic re-enrolment

Roughly every three years after an employer’s:

• last cyclical re-enrolment date, or
• duties start date if this is their first cyclical re-enrolment

they must re-enrol eligible jobholders who opted out or ceased active membership of the scheme (which includes paying contributions that are below the minimum contributions requirement).

Cyclical re-enrolment effectively follows the same process as automatic enrolment, but there are some key differences:

• Automatic re-enrolment only applies to eligible jobholders who’ve already had an auto-enrolment date with that employer*
• Postponement can’t be used with cyclical re-enrolment – so if an employee meets the eligible jobholder criteria on the re-enrolment date, they must be re-enrolled with effect from that date.

Employers can do this more frequently than once every three years (for example, an employer might do this on an annual basis), but they’re only required to comply with statutory cyclical re-enrolment requirements once every three years.

There is no requirement for employers to write out again to non-eligible jobholders or entitled workers to inform them of their right to opt in/join (as appropriate) on the cyclical auto re-enrolment date.

* There is one exception to this – an employer may have a re-enrolment duty for a worker who has never had an automatic enrolment date. This only happens when the employer is exempted from the automatic enrolment duty and up to the cyclical re-enrolment date, the worker has never met the eligible jobholder criteria but then is an eligible jobholder for the first time on the cyclical re-enrolment date. Such workers should be assessed for cyclical re-enrolment, despite never having been automatically enrolled.

Employers can choose the date they want to use for cyclical re-enrolment. It can be any date that falls within a six-month window that starts three months before the third anniversary of either:

• their last cyclical re-enrolment date, or
• their duties start date if this is their first cyclical re-enrolment,

and ends three months after that anniversary.

For example, if the employer’s last cyclical re-enrolment date was 1 May 2020, the six-month window runs from 1 February to 31 July 2023 inclusive.

The date selected by an employer applies to all employees who are being automatically re-enrolled. It’s not possible to choose one date for one section of the workforce and a different date for others – the date selected applies across the scheme to all eligible jobholders who’re being re-enrolled.

It’s important to choose the cyclical re-enrolment date carefully, as the date chosen is also:

• the date from which active membership must start for those eligible jobholders who are being automatically re-enrolled
• the joining window start date (the six-week period during which automatic re-enrolment must be completed)
• the start date for the calculation of contributions due to the scheme for those who are being automatically re-enrolled.

Employers will likely also want to consider using a date that:

• aligns with other key dates in their business calendar e.g. the start of the corporate year,
• avoids clashing with any seasonal peaks in the employee population,
• allows them to avoid having to calculate and pay part period pension contributions – to do this, the employer should choose a re-enrolment date that coincides with the first day of a pay reference period.

Employers don’t have to assess all their workers for re-enrolment. They can exclude:

• any worker who is an active member of a qualifying scheme that they provide on the cyclical re-enrolment date,
• any worker aged 21 or under on that date,
• any worker who has reached at least the state pension age on that date,
• any worker who has not yet had an automatic enrolment date*. This will be any worker:
  • who has been a non-eligible jobholder or an entitled worker since the start of employment (or staging or duties start date, if later) and has never met the eligible jobholder criteria, or
  • who, when they met the eligible jobholder criteria, postponement was used and on the deferral date the eligible jobholder criteria were not met, or
  • who was an active member of a qualifying scheme at their employer’s staging date but has never met the eligible jobholder criteria either whilst an active member or after active membership ceased,
  • who is subject to the transitional period for defined benefit and hybrid pension schemes on the cyclical re-enrolment date,
  • who is subject to postponement on the cyclical re-enrolment date.

*There is one exception to this – an employer may have a re-enrolment duty for a worker who has never had an automatic enrolment date. This only happens when the employer is exempted from the automatic enrolment duty and up to the cyclical re-enrolment date, the worker has never met the eligible jobholder criteria but then is an eligible jobholder for the first time on the cyclical re-enrolment date. Such workers should be assessed for cyclical re-enrolment, despite never having been automatically enrolled.

Once the employer has assessed the workers they need to assess, those who meet the eligible jobholder criteria must be re-enrolled. However there are times when the employer can exempt some workers and there are other occasions where the requirement to automatically enrol is optional. Which applies depends on whether the eligible jobholder meets certain conditions.

An employer may choose whether to automatically re-enrol any eligible jobholder who:

• opted-out or ceased active membership of a qualifying scheme (or a scheme that would have been a qualifying scheme) at their own request within the 12 months before the cyclical automatic re-enrolment date. (Note: paying contributions below the minimum level does not constitute being an active member of a qualifying scheme, so if a worker reduced their contributions in the 12 months before the cyclical automatic re-enrolment date, the employer may, but doesn’t have to, re-enrol them)
• has given their employer their notice to end their employment (resignation or retirement) or has been given notice of dismissal by the employer,
• has Primary, Enhanced, Fixed or Individual protection,
• holds the office of Director with the employer,
• is a partner in a Limited Liability Partnership (LLP)which is the employer and is not treated for income tax purposes as a ‘salaried member’,
• was paid a winding up lump sum within the 12 months before the re-enrolment date whilst in employment with the employer and then during the 12 months period starting on the date the winding up lump sum was made:
  • ceased employment and
  • was subsequently re-employed by the same employer

The Pensions Regulator has more information about the exceptions from the automatic re-enrolment duty in its guidance ‘Automatic re-enrolment: Putting workers back into pension scheme membership’ (see paragraphs 30 to 33).

If an employer chooses to re-enrol an eligible jobholder who falls into any of these categories, then the normal employer duties must be fulfilled. If not, they have no further duties for these individuals until the next cyclical re-enrolment date, unless:

• the worker asks to join or opt-in, or
• the information about the right of a jobholder to opt-in and the right of an entitled worker to join has not yet been given.

Employers must also re-declare their compliance to TPR stating how they’ve met their re-enrolment duties. This must be done within 5 months of the third anniversary of their original staging date and then within 5 months of the third anniversary of their last re-enrolment date. Employers who have not had to cyclically re-enrol anyone due to only having non-eligible jobholders and/or entitled workers, still have to complete a re-declaration of compliance.

Aligning the cyclical re-enrolment date for multiple employers

Sometimes, corporate groups are complex and there may be a number of separate employers with their own different staging dates within the group. If such a group couldn’t align the staging dates for the different employers within the group at outset (by using postponement or by bringing some or all staging dates forward), cyclical automatic re-enrolment presents an opportunity to align automatic enrolment duties across the group, which might be desirable.

Here’s an example of how two employers with different staging dates can align their cyclical automatic re-enrolment dates:
 

If Employer A and Employer B both chose the same date between 1 and 30 June 2023 as their cyclical automatic re-enrolment date then they have aligned their re-enrolment duties.

In some cases it might take more than one cyclical re-enrolment cycle to achieve alignment. For example:
 

There is no overlapping period where Employer A and Employer B can choose the same cyclical re-enrolment date. However, if Employer A picks a date towards the end of their cyclical automatic re-enrolment window (for example, 1 June 2020) and Employer B picks a date towards the start of their cyclical automatic re-enrolment window (for example, 1 August 2020), they should be able to align their cyclical automatic re-enrolment duties at the next cyclical re-enrolment date, as shown:
 

If both employers choose the same date between 1 May 2023 and 31 August 2023 as their cyclical automatic re-enrolment date, then they have aligned their re-enrolment duties.