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Automatic enrolment has been in place in the NHS Pension Scheme for a long time, as it is part of the existing joining process. Employers in the NHS are required under the NHS Pension Scheme regulations to automatically enrol all eligible employees into the NHS Pension Scheme from the first day of their employment.
From 1 October 2012, the government introduced new automatic enrolment legislation that applies to all employers across all sectors and industries in the UK. The existing automatic enrolment processes set out in the NHS Pension Scheme regulations are not the same as the requirements of the new automatic enrolment legislation. It is important for employers in the NHS to ensure they comply with both sets of automatic enrolment requirements at the same time.
The employer must provide the eligible jobholder with certain enrolment information before the end of the joining window, that tells them:
- that they have been or will be automatically enrolled and what this means to them
- of their right to opt out and their right to opt back in
- a statement about where to find further information about pensions and saving for retirement.
The NHSPS is a qualifying pension scheme, however an eligible jobholder restricted from active membership of NHSPS must be offered an alternative qualifying pension scheme, for further information see our procurement and alternative pension providers web page.
An employer must automatically enrol any eligible jobholder working for them who is not already an active member of a qualifying pension scheme from the following dates:
- staging date
- new joiner commencement date
- date they reach the eligible jobholder age and earnings triggers
The law sets out a time limit for completing automatic enrolment. Before the end of what is known as the 'joining window' (please note that the joining window was extended from one month to six weeks with effect from 1 April 2014) the employer must:
- give information to the pension scheme about the eligible jobholder
- give enrolment information to the eligible jobholder
- make arrangements to achieve active membership for the eligible jobholder
- keep records of this process.
In order to comply with automatic enrolment legislation, eligible jobholders must be automatically enrolled before they can opt out. Any other opt outs would be classed as ‘ceasing membership’ and would not be a valid opt out under automatic enrolment duties.
The opt out period begins from the day the worker becomes an active member of the pension scheme or the date the pension information is sent by the employer to the worker, whichever is the latest.
Once enrolled into a qualifying pension scheme, an eligible jobholder can decide to opt out of the pension scheme. It is important they are able to make an informed decision.
In order for an eligible jobholder to opt out they must complete a valid opt out notice. If an invalid opt out notice is received, the employer must write to the worker explaining why it is invalid and ask the worker to return a valid opt out notice. If the worker already has at least two years membership of the scheme or has fixed or enhanced protection, they must complete the opt out form within the one month opt out window. If it is completed incorrectly, the employer must allow a further two weeks in addition to the one-month opt out period for this to be returned. Workers can choose to cease membership at any point they wish. Ceasing membership outside of the opt out window and any entitlement to refunds will be dealt with in accordance with scheme rules.
Employers can continue to provide opt out forms until their staging date, but from staging date onwards, the form must be provided by the pension provider (Previous advice stated that employers could not directly provide opt out forms to employees following new regulations introduced in July 2012. Please note this advice has now reverted to the original position stated above following a clearer interpretation of rules from The Pensions Regulator).
To comply with safeguards, employers should follow the published process for opt outs from NHSPS and the alternative pension provider.
These safeguards are in place to ensure that the jobholder’s decision to opt out is taken freely and without influence from the employer, for further information see the safeguarding web page. A jobholder could feel pressured into opting out if they were to receive the opt-out notice from their employer, either separately or with other pension scheme information.
Workers who have opted out of the NHSPS can rejoin at a later date if they wish to do so. There are no time restrictions in place for rejoining the NHSPS, however under the legislation employers are only obliged to allow workers to rejoin once within any 12 month period. Workers can request to rejoin by writing to their employer.
Although all NHS employees are contractually entitled to join NHSPS, contractual enrolment is not sufficient to meet automatic enrolment duties.
For example, someone can choose to cease membership of NHSPS and if the individual is an eligible jobholder at the point they make that decision, that is a valid opt out under automatic enrolment rules, but if they are a non-eligible job holder or entitled worker ceasing membership, they will have to be enrolled again, at the point they reach the eligible jobholder age or earnings triggers.