Auto-enrolment and Re-enrolment

An overview

Workplace pension law changed in 2012 when the government introduced a law which requires all employers to enrol their eligible workers into a workplace pension scheme automatically if they are not already in one.

The government is getting employers to do this automatically at work so it is easier for people to start saving. The aim is to help more people have another income, on top of the State Pension, when they retire. The State Pension will provide a basic income for retirement, but it might not be enough for all your needs. Workplace pensions add to this income. They act as a crucial supplement, potentially filling the gap between the income you receive from the State Pension and the income you need to live comfortably. You can opt out if you want to, but, if you stay in, you will have additional pension savings which you get when you retire. 

What's more, if you stay in a pension scheme, the University will contribute to your pension. So, unlike other ways of saving, being in a workplace pension scheme means you're not the only one putting money in. You also benefit from tax relief for any contributions paid.

Auto-enrolment at the University of Reading

Auto-enrolment into a pension scheme at the University started from 1 October 2013. Most employees are enrolled into a pension scheme as part of their contract when they start their employment at the University. Employees who are not enrolled into a pension scheme as part of their contract will be automatically enrolled by law if they:

• earn £833 or more in any one month (i.e. the equivalent of £10,000 a year);
• are aged 22 or over;
• are under State Pension age; and
• work or ordinarily work in the UK.

Everyone who is automatically enrolled into a pension scheme will be contacted directly in writing after they have been enrolled, either by Aviva (as the pension scheme administrator for URPS) or by the University's Pensions Office (on behalf of USS). Anyone enrolled into a pension scheme can opt out if they want to and the enrolment notice will give details of how to do this. Please note, if you wish to receive a discretionary refund of your contributions, you must do this within one month of being enrolled.

Postponement

If you are currently an employee of the University and below 22 years of age, you may be enrolled into the pension scheme at a future date if you meet the auto-enrolment criteria on or after your 22nd birthday. Near your 22nd birthday, the Pensions Office will write to you to confirm this. If you wish to join or be enrolled into the pension scheme before this date, please download and complete the ‘Join/opt into a pension scheme’ form which can be found in the “Things To Do Now”. Alternatively, you can join or opt in by sending an email to the Pensions Office which includes the sentence ‘I confirm I personally submitted this notice to join a workplace pension scheme.’ Once this has been sent to our team, we will then be able to arrange for you to start contributing at the next available pay date.

Re-enrolment at the University of Reading

As part of the legislation, re-enrolment requires employers to ensure that any eligible workers are enrolled back into a pension scheme every 3 years. This means that anyone who was previously enrolled but then opted out, or withdrew, may be put back into a qualifying pension scheme at the next re-enrolment date. The next re-enrolment date for the University will be 1 July 2025. Therefore, if staff are not in a pension scheme and meet the auto-enrolment criteria on the re-enrolment date, they will be enrolled back into their appropriate pension scheme. For staff on Pay Grades 1 to 5, they will be re-enrolled into the University of Reading Pension Scheme (URPS). For staff on Pay Grades 6 and above, they will be re-enrolled into the Universities Superannuation Scheme (USS). If you are not paid on a Pay Scale, you will be enrolled into the appropriate scheme. 

Anyone re-enrolled into a pension scheme can opt out if they want to and the enrolment notice will give details of how to do this. Please note, if you wish to receive a discretionary refund of your contributions, you must do this within one month of being re-enrolled.

Should I opt out?

Before deciding to opt out of pension saving, it is worth remembering that you would miss out on the University’s contributions to your pension, and the valuable lump sum benefits for your family should you die whilst being a scheme member. It is also worth remembering that the regular contributions you pay into the scheme will be eligible for tax relief (and National Insurance relief if taken under the Salary Sacrifice arrangement), so the cost may not be as great as you might think.

Please note that by law you are not able to opt out of the pension scheme until you receive confirmation that you have joined.

Key points for managers

There are certain key points you will need to know as a manager of other employees and these are:

• anyone meeting the eligibility criteria has to be enrolled
• there is a broad definition of worker so individuals paid on fees forms or similar can be affected
• individuals can opt out once enrolled but they cannot opt out in advance
• existing scheme members are not affected
• the employer must not give any form of inducement to persuade someone to opt out of scheme membership. This is a safeguard covered by law
• the employer's contribution for anyone in membership of USS is 14.5% of pay
• the employer's contribution for anyone in membership of URPS is 5% of pay rising to 7% once they have been a member for 5 years
• an employee’s life cover is linked to their pension scheme
• no contracts can be backdated