Bulletin to participating employers about automatic enrolment

Background

With the introduction of automatic enrolment, the rules of the University of Oxford Staff Pension Scheme (OSPS) have been amended to ensure that the scheme can be used to meet the auto-enrolment requirements. Further details of the rules can be  found on the website.

This note details consideration that employers must give for certain categories of employees and the decisions required for these groups and information about certification requirements.

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New employees - exclusivity

Under the rules of the OSPS, the default position for new employees who are not of academic or academic-related status is that they are entered into OSPS.  The effect of this is that all such new employees will need to be enrolled into OSPS automatically.  This is the case now and is not a new requirement.

The scheme Trustee is accordingly on notice that all employers will be using OSPS as a qualifying scheme for automatic enrolment purposes

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Employees who had been enrolled into OSPS and opted out

Currently under OSPS, an employee who has opted out of OSPS may not re-join unless the employer decides otherwise. 

However, under the rules the default will be for employers to use OSPS as the auto-enrolment scheme for employees who have previously opted out.  Additional flexibility has been built in to allow employers to offer a different auto-enrolment scheme for employees who had previously opted out. To do this you need to give written notice via the Pro-forma notice (28kb)) to the Trustee not to use the OSPS in respect of this group of employees. 

Employers may continue to agree to allow employees who had opted out to rejoin on a case by case basis even if notice has been given not to use OSPS for auto-enrolment purposes for this group.

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Irregular employees

Currently irregular employees (those who work irregular hours that may vary from time to time depending upon the needs of the employer) are only allowed membership of OSPS if the employer agrees. 

However, under the rules the default will be for employers to use OSPS as the auto-enrolment scheme for irregular employees. Additional flexibility has been built in to allow employers to offer a different auto-enrolment scheme for irregular employees. To do this you need to give written notice via the Pro-forma notice (28kb) to the Trustee not to use OSPS in respect of this group of employees. 

Employers may continue to agree to allow irregular employees to join on a case by case basis even if notice has been given not to use OSPS for auto-enrolment purposes for this group.

Irregular employees eligible for OSPS covers non-academic staff. Academic staff, such as external tutors, would not be eligible for OSPS, unless notice was given to the Trustee. 

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Workers not ordinarily eligible for OSPS

If you have workers who are not in employment with you with non-academic grade status (i.e. not ordinarily eligible for OSPS), but who have rights under automatic enrolment legislation to:

  • (a) be automatically enrolled as an "eligible jobholder"; or
  • (b) to opt in to an automatic enrolment scheme as a "non-eligible jobholder"; or
  • (c) to opt in to a pension scheme and have contributions deducted and paid over direct from payroll (but without any right to employer contributions) as an "entitled worker".

they will not automatically be enrolled into OSPS by default. However flexibility has been built into OSPS to allow you to give notice to the Trustee via the Pro-forma notice (28kb) to include such groups of workers (or any subset of them) as eligible for OSPS.

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Decisions required

Participating employers need to decide ahead of their staging date if you will use OSPS as the auto-enrolment scheme for:

  • Employees who had been enrolled into OSPS and opted out (the default position is that this group will be admitted to OSPS);
  • Irregular employees (the default position is that this group will be admitted to OSPS); and
  • Any other workers not ordinarily eligible for OSPS (the default is that this group will not be eligible for OSPS). 

You can decide to use OSPS for all these groups or for certain sub-groups of these categories. If groups of employees who have opted out or are irregular employees are to be excluded, written notice must be given to the Trustee in advance, as notice cannot be retrospective. To include anyone who wouldn't ordinarily be eligible when first employed, notice to include them is needed. Notices may be revoked.

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Qualifying scheme certification

Employers have the duty to ensure that they comply with auto-enrolment requirements, including satisfying themselves that the scheme that they offer is a qualifying scheme. Please refer to the Department for Work and Pensions and Pensions Regulator websites for further guidance.

OSPS is a defined benefit scheme. It is contracted-out and is a career average scheme. The Trustee of the scheme confirms that a contracting-out certificate is in place. In addition the scheme provides revaluation, in service, of the earnings on which the pension is calculated at least in line with increases in the Retail Price Index (RPI) capped at 2.5%. 

If you have any queries about this, please contact the scheme secretary or the Pensions Office.

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Other processes to be changed for automatic enrolment

As you may be aware, the automatic enrolment legislation includes specific rules about certain processes. More details are available from the DWP and Pensions Regulator websites or the Pensions Office but in brief:

  • Information: certain information must be provided to the Trustee by law in connection with automatic enrolment, such as residential address for those who are statutorily enrolled.
  • Statutory opt-out by a worker (not applicable to anyone subject to contractual enrolment): this involves obtaining an opt-out form from the Pensions Office (specifically not the Employer) and returning it to the Employer within a month of his/her automatic enrolment date or receipt of automatic enrolment information if later. The Employer must check it is a valid notice and then stop deducting contributions/applying pension salary sacrifice, inform OSPS and pay any refund due to the worker within the statutory time limit. Employers must keep copies of opt out notices for 4 years. Any contributions paid to the OSPS will be refunded to the Employer.
  • Outside the statutory window for opt-out (or if not entitled to statutory opt-out) a worker may opt out of OSPS as before.
  • Statutory opt-in by a worker: if an Employer receives an opt-in notice, you must check it is valid and then make arrangements for joining OSPS (if it is the applicable scheme) as if the worker is being automatically enrolled. If statutory opt-in is not available, the usual OSPS rules apply.
  • Postponement: automatic enrolment of a worker can be deferred up to three months. It would be helpful if OSPS is informed of your policy on postponement.  Note, however, that new employees should be admitted to OSPS from the first day of employment under OSPS Rules so in practice those already eligible for OSPS will be in a qualifying scheme from the first day of their employment. 
  • Employment contract wording on pension matters may need to be reviewed to ensure that the contract is consistent with the approach to automatic enrolment and information requirements. 
  • The Pensions Regulator website has information on the differences between contractual and automatic enrolment. 
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