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Formal assessment of staff

When your client starts to have duties, they must carry out a formal assessment of their staff to work out their automatic enrolment duties for individual members of staff - see our page on checking who to enrol to find out how to do this.

Once this is done, your client must ensure eligible staff are enrolled by sending their pension scheme the information they need to make them active members of the scheme. This should be done as quickly as possible.

Staff may wish to join, opt in or opt out of (or leave) a scheme and in each case you’ll need to understand what your client needs to do. For staff who ask to:

  • join a pension scheme – your client must provide a pension scheme for their staff to pay contributions into, but your client doesn’t have to contribute
  • opt into a pension scheme – your client must put them into a pension scheme that can be used for automatic enrolment and pay regular contributions
  • opt out of a pension scheme – your client’s staff who have been enrolled or who have opted in, have the right to opt out within a certain period, and your client must act on this request (see our page on opting out).

How to assess your client's workforce for automatic enrolment

Assessing the workforce is a key step that every employer must take as they comply with their automatic enrolment duties. Watch our video to find out what a business adviser needs to do if they undertake this task on behalf of an employer.

View the script for this video

Duties for new employers without PAYE schemes

Employers who take on their first member of staff on or after 1 October 2017 have duties from the day their first worker begins employment.

If their staff earn £116 per week (£503 a month) or below, HMRC may not require them to set up a PAYE scheme.

Your client does still have certain automatic enrolment duties, however, and must start to complete them as soon as they employ their first member of staff:

  • they must write to their staff to tell them how automatic enrolment applies to them
  • if their staff then ask in writing to be put into a pension scheme, your client must set this up for them but they do not have to pay into it

When your client starts paying a member of staff more than £116 per week, they must set up a PAYE scheme with HMRC. They must also assess their members of staff to work out if they need to be put into a pension scheme that your client must also pay into.

After your client has set up their PAYE scheme, we'll write to them and ask them to complete a declaration of compliance, which is where they tell us how they've met their duties, by a specific date.

To find out more about the duties your client will need to complete if they become a new employer, please refer to our page on duties for new employers.

Giving notice

If a member of staff gives notice, or the employer gives them notice, to leave employment before the employer has completed the automatic enrolment process, the employer has a choice whether to enrol them or not.

Postponement on your client's duties start date

Your client may use postponement on their duties start date to delay the automatic enrolment assessment for some or all of their staff for up to three months. For example, if your client knows a staff member will be leaving within three months of the start of their legal duties, your client may apply postponement to that individual. This means your client won’t need to assess this staff member to identify what duties they have until the last day of the postponement period, at which point your client must enrol any staff members who are eligible. Read more information about postponement.

If your client is using postponement and a member of staff requests to be enrolled during the postponement period, they must be put into a pension scheme. See checking who to enrol for further information.

Ongoing responsibilities

Once staff are active members of a pension scheme, there are ongoing responsibilities for the employer, such as ensuring contributions are paid on time and that any notices relating to staff opting in and joining or opting out are processed and accurate records maintained. See knowing your client's ongoing duties for more information.

What letters are sent to my clients from TPR?

The Pensions Regulator (TPR) sends out letters and emails to employers to support them with their automatic enrolment duties. These letters form a series of communications which are sent to your clients during the automatic enrolment process, helping them to understand their duties and guiding them through what to do next.

You may find it useful to familiarise yourself with these, to help your clients understand what do to and by when.

Advanced guidance

This resource may help if your client has more detailed questions on the above:

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'Opting out' is when a staff member decides to leave your pension scheme within a month of being enrolled. Staff that have been enrolled and those who have opted in can choose to opt out.

Your client must not actively encourage their staff to opt out of their workplace pension (which could be considered an ‘inducement’). Any decision to opt out must be taken freely by the staff member without influence from the employer.

Key points

  • staff who have been automatically enrolled or who have opted in have the right to opt out
  • the decision to opt out of the workplace pension must be taken freely by the staff member
  • staff cannot opt out until after they’ve been automatically enrolled
  • the opt-out period is one month from when active membership is created, or they receive their letter with the enrolment information, whichever is latest
  • staff opt out by getting an opt-out notice from the pension scheme which they then complete and give to their employer
  • the employer must issue a full refund of any contributions the staff member has made into a pension scheme within a month of receiving a valid notice

The opt-out period

Once staff have been enrolled into the pension scheme, they have one calendar month during which they can opt out and get a full refund of any contributions. This is known as the ‘opt-out period’. It starts from whichever date is the later of:

  • the date active membership was achieved
  • the date they received a letter from their employer with the enrolment information

Staff can’t opt out before the opt-out period starts or after it ends. If they decide to leave the scheme outside this period, they will instead be ‘ceasing active membership’. Whether they get a refund of contributions will depend on the pension scheme rules.

Refunds

Your client must give the staff member a full refund of any contributions the staff member has made within a month of them opting out. Your client’s payroll will have a record of how much this is. Normally, your client should issue the refund in the next payroll after they get the opt-out notice.

The pension scheme will refund to your client any contributions it’s received for that staff member.

Your client shouldn’t wait for the scheme to refund them before they refund their staff member as this could mean they miss the one-month deadline.

Statutory information to be included in the opt-out notice

For an opt-out notice to be valid, it must contain all of the information below.

If it doesn’t, your client must give it back to the staff member and ask them to resubmit it. The opt-out period will be extended to six weeks to allow them to provide a valid notice.

About the member of staff

  • full name
  • name of the employer
  • National Insurance number or date of birth
  • signature or, if in electronic format, a statement confirming that the jobholder personally submitted the notice
  • date the jobholder completed the form

Statements and warnings

The notice should include the following just above their signature:

  • ‘I wish to opt out of the pension scheme’.
  • ‘I understand that if I opt out I will lose the right to pension contributions from my employer’.
  • ‘I understand that if I opt out I may have a lower income when I retire’.

The notice must also contain a section called ‘what you need to know’ with the following statements included:

  • Your employer cannot ask you or force you to opt out.
  • If you are asked or forced to opt out, you can tell The Pensions Regulator.
  • If you change your mind, you may be able to opt back in – write to your employer if you want to do this.
  • If you stay opted out of the scheme, your employer will normally put you back into pension saving in around three years.
  • If you change your job, your new employer will normally put you back into pension saving straight away.
  • If you have another job, your other employer might also put you into pension saving, now or in the future. The notice only allows you to opt out of pension saving with the employer you name in the notice. A separate notice must be filled out and given to any other employer you work for, if you wish to opt out of that employer’s pension saving as well.

Advanced guidance

These resources are aimed at professional advisers and employers with in-house pensions professionals.
6. Opting in, joining and contractual enrolment
PDF 142KB , 27 pages
How to process pension scheme membership outside of the automatic enrolment process.
7. Opting out
PDF 158KB , 22 pages
How to process 'opt-outs' from workers who want to leave a scheme.

Some staff who aren’t eligible for automatic enrolment have a right to opt in to their employer’s pension scheme. Staff who opt in are entitled to contribution into the pension scheme from their employer.

Other staff can ask to join a pension scheme but aren’t entitled to an employer contribution, though the employer can pay one if they want to.

Key points

  • Opting in and joining are not the same.
  • Staff opt in or join by writing to their employer.
  • The pension scheme the employer uses for staff who opt in must be suitable for automatic enrolment.
  • The employer doesn’t have to pay an employer contribution into the pensions of staff who join.

How staff opt in or join

As part of an employer’s automatic enrolment duties, they’ll have written to the staff who weren’t eligible for automatic enrolment telling them about their right to opt into, or join, a pension scheme.

Staff can decide to opt in or join at any point. They do this by writing to their employer.

Checking opt in or joining requests

All requests to opt in or join must be in writing and signed by the person asking to opt in or join. If they sent it to your client electronically, it must include a statement from them that they personally submitted the request.

It could be months or even years after your client first told staff about their right to opt in or join that they choose to do so. So your client will need to check their staff member is still entitled to opt in or join by checking their age and earnings. Business software (eg payroll) will help them do this.

Checking the right to opt in

Staff who can opt in are:

  • aged 16-21, or state pension age to 74
  • earning above £10,000 a year

or

  • aged 16-74
  • earning above £6,032 up to and including £10,000 a year

Staff who have previously asked to leave the scheme, either after being enrolled or opting in, can also opt in again. But if they’ve already asked to opt in during the last 12 months and subsequently asked to leave or ceased membership, it’s up to the employer to decide whether to enrol them. There’s no obligation to do so.

Checking the right to join

Staff who can join are:

  • aged 16 to 74
  • earning £6,032 or less per year

What your client must do

If the requests are signed and the staff member still has the right to opt in or join, your client must enrol them into a pension scheme. If the request isn’t signed, the staff member will need to resubmit it signed.

Staff opting in

Your client must enrol staff who have opted in to a pension scheme they are using for automatic enrolment. Your client must usually do this within a month of receiving the request. Once in the pension scheme, they are treated the same as staff who had to be enrolled which means your client must pay an employer contribution.

Staff joining

The pension scheme your client puts these staff into doesn’t have to be one they use for automatic enrolment and they don’t have to pay an employer contribution unless they want to, but the scheme should still be good quality. The scheme provider will tell your client the date when the staff member will go into the scheme.

Advanced guidance

These resources are aimed at professional advisers and employers with in-house pensions professionals.

6. Opting in, joining and contractual enrolment

6. Opting in, joining and contractual enrolment
PDF 142KB , 27 pages
How to process pension scheme membership outside of the automatic enrolment process.
An employer can choose to delay assessing and therefore enrolling; an individual, some, or all of their staff into a pension scheme for up to three months. They must write to their staff to tell them they’re postponing automatic enrolment for them.

Key points

  • An employer can postpone automatic enrolment for up to three months from certain dates
  • If your client postpones from the date their legal duties started, this date does not change
  • If your client chooses to postpone from the date their legal duties started, they still have duties (eg they must write to tell the staff who will be postponed, within six weeks of their duties start date)
  • Use our sample postponement letter to write to staff

Why your client might postpone

One of the main reasons your client might decide to postpone is if they have new temporary or short-term staff who they know will stop working for them within three months.

Your client can also use it to align automatic enrolment with their other business processes, or they can choose to postpone automatic enrolment for any other business reason.

When your client can postpone

Your client can only postpone automatic enrolment from:

  • the date their legal duties started
  • a staff member’s first day of employment
  • the date a staff member first becomes eligible for automatic enrolment

If your client postpones from the date their legal duties started, it doesn’t change the date the duties apply from.

Employers can only use postponement if they are within six weeks of the date they became eligible for automatic enrolment.

Postponing automatic enrolment

Your client must write to tell the staff whose automatic enrolment they’re postponing. They have six weeks from the date postponement starts to write to them. There’s no need to tell us that a client has decided to postpone automatic enrolment.

Your client can postpone for up to three months. They can postpone as many or as few staff as they like and the postponement period doesn’t have to be the same length for everyone.

Our postponement letter template for all staff helps your client write to them as required by law. You can tailor the letter template to your needs.

During the postponement period

Staff whose automatic enrolment your client has postponed can choose to opt in to your client’s pension scheme during the postponement period.

For more information about what to do if your client gets an opt-in request, go to opting in and joining.

At the end of the postponement period

On the last day of the postponement period, your client will need to know whether any member of staff whose automatic enrolment they’ve postponed is still eligible to be enrolled. If they are, your client must put them into a pension scheme straight away. Your client cannot apply a further period of postponement even if they postponed for less than the three months allowed.

Advanced guidance

These resources are aimed at professional advisers and employers with in-house pensions professionals.
3a. Postponement
PDF 119KB , 23 pages
It includes examples of other notices you might want to send to staff depending on whether they have a right to enrol, opt in or join a pension scheme.