Cambridge uni scheme scrutinises opt-outs in prep for re-enrolment

From the end of this year the largest schemes will reach the three-year anniversary of their auto-enrolment staging date, and will be required to re-enrol individuals who previously opted out.

However, employers need to be aware of subtle differences from the original auto-enrolment process in terms of eligibility and timing.

Knowing why people opt out could be valuable to us in looking at our employment package

Sue Curryer, CUACPS

CUACPS operates a hybrid scheme. It consists of two components: a defined benefit fund providing career revalued benefits, and a section in a mastertrust acting as a defined contribution top-up.

Members and the employer make contributions to the DB scheme and the employer makes a further 5 per cent contribution to the DC scheme.

The employer has contractually enrolled employees since 1923, said Sue Curryer, head of pensions administration at the fund. She said a large proportion of those re-enrolled will be those who opted out when the scheme began auto-enrolment on March 1 2013.

Curryer said the scheme had previously surveyed employees to find out their reasons for opting out and was considering similar exercises in the run-up to re-enrolment.

Opt-out drivers included people being on fixed or part-time contracts, recent graduates with large debts and the high cost of living in Cambridge.

“We expect it to be the same sort of things,” she said, adding: “Knowing why people opt out could be valuable to us in looking at [our employment package].”

Employers can struggle to keep younger workers engaged with their pension schemes. Last year plumbing products supplier Wolseley attributed a creeping opt-out rate in part to the number of young new starters.

But despite opt-outs, membership of the Cambridge scheme grew to 4,128 in July 2013 from 3,644 active members in July 2012. Curryer said she also expected some people who had previously opted out to stay in following re-enrolment, further boosting scheme membership.

She added the scheme had some work to do around communication with members who were being re-enrolled, but was in a good position to carry out the exercise.

If someone’s an eligible member, they have to be put in. An employer can choose to ignore anyone who came out of the scheme in the previous 12 months

Phil Duly, Barnett Waddingham

“We’ve done it once so I’m more relaxed than I was three years ago,” she said.

Getting re-enrolment right

Brian McCauley, institutional client service director at SEI, which provides the mastertrust for CUACPS, said: “Just as with auto-enrolment in the first cycle, pension schemes that have appointed a mastertrust are likely to find the re-enrolment process a lot easier and more straightforward.”

He added: “The trustee board within the mastertrust will provide support to the sponsoring employers to assist with the re-enrolment process, including working with the administrator and providing the relevant communications.”

Phil Duly, associate at consultancy Barnett Waddingham, said employers with contract-based or other types of pension schemes should be similarly able to handle re-enrolment, but they should consider the differences between auto-enrolment and re-enrolment.

“It certainly needs to be on the radar for employers,” he said.

Duly said schemes re-enrolling could change the date to three months either side of the original, giving more flexibility.

Postponement periods for new employees also do not apply, he added, so they must be enrolled – even if they previously would have been enrolled after a set period of time.

“If someone’s an eligible member, they have to be put in. An employer can choose to ignore anyone who came out of the scheme in the previous 12 months,” he said.