In the context of UK pension schemes, postponement refers to a legal provision that allows employers to delay the automatic enrollment of eligible workers into an occupational pension scheme. This can be applied to all employees or some of them. During this postponement period, employees are not enrolled in the pension scheme, and no pension contributions are deducted or made on their behalf.
This flexibility allows employers to align the start of automatic enrollment with their payroll cycles or other business needs, such as waiting for a probation period to end, or for seasonal workers to end their contract.
Yet, there are specific conditions for postponement to be requested:
Duration: The postponement period must not exceed three months from the employee's automatic enrollment date.
Request time: Postponement can only be requested from your duties start date, or a new employee's start date / becomes eligible for autoenrolment.
Automatic enrollment duties: Employers must still assess their staff to determine eligibility for automatic enrolment and keep records of their compliance with pension duties during the postponement period.
Employee rights: Employers must provide written communication within 6 weeks of postponement to all eligible jobholders informing them of the postponement and explaining their right to opt into the pension scheme during the postponement period if they choose to do so. Here is a template for this letter.
Note that in this case, employers must make pension contributions retroactively from the employee's automatic enrolment date if they opt in during the postponement period.
Note that Smart Pension can facilitate the necessary communication if you opt for a postponement from the employee’s employment start date - as long as you have provided Kota and Smart Pension with your employees’ information. However, if the postponement is taking place with a newly eligible employee, this must be handled through your payroll.
If you use postponement, it doesn't change your duties start date or your declaration of compliance deadline.
You cannot apply a further period of postponement for these staff, even if you postponed for less than the three months allowed.