As the implementation of Auto Enrolment moves into its second year the key messages coming from businesses is the impact the additional administrative burden being placed on payroll and hr departments is having.
When Auto Enrolment Pensions were originally announced by the Government the added costs to a business of funding the pension contributions was very clearly evident, but it is only now that the full extent of the additional administrative processes needed to monitor and manage schemes is becoming truly apparent.
Whilst so far these have impacted on larger organizations with arguably the internal resources to manage the changes, it will certainly have a considerable impact on the Payroll functions of smaller businesses many of which are already stretched having to take on the additional administration created by RTI.
With the risk of fines of up to £5,000 a day for non compliance they cannot fail to meet the challenges ahead.
So what additional administration is being created?
When looking at the extra operational process and admin being created by the changes you need to look at the position both prior to and after the staging date.
Prior to implementation a business needs to address the following:
- Identify it’s staging (or implementation) date
- Ensure they have a qualifying pension scheme in place
- Communicate the changes with their employees
- Make sure their payroll system can cope with the correct deduction of pension contributions
- Put HR processes in place to track which employees are eligible, have opted in or out and to regularly communicate with them
Unfortunately once operational it doesn’t stop. There will be an onerous administration function to be carried out every pay period requiring a system and audit trail in order to meet the requirements of the Pensions Regulator.
Every month the payroll needs to ensure the correct pension contribution is made for each employee. This is fairly straightforward for employees with fixed salaries, but once you take into consideration flexible working, overtime and bonuses and varying shift patterns it becomes considerably more difficult.
In addition a system for monitoring opt outs, opt ins and re-enrolments as well as certifying the scheme on an annual basis will be required.
Help to ease the process
So how can a business ease the burden that this additional administration is going to place on them?
The key is preparation and planning. First step has to make sure they know when their staging date is so that they understand the timescale they have to work with and then start preparing for the changes as soon as possible.
As the staging dates for the majority of businesses get closer the pressure on third party suppliers will increase which could easily result in delays for businesses that leave it to late with the risk of fines coming into play.
You can find your staging date here.
Secondly, understand what auto-enrolment is and what it means practically for their business.
Download our Free Guide to Auto Enrolment.
Thirdly they need to start to engage with professionals that can help them to prepare including financial advisors, pension companies and payroll providers.
How Qtac can help
At Qtac we have been working on auto enrolment since the change was first announced.
Our HMRC recognised payroll software, written by our in-house developers, provides businesses with an auto-enrolment system that will manage the automatic enrolment process from start to finish and supports them in reducing the additional administrative burden it brings.
Alternatively, we provide an outsourced payroll service that is fully compliant with RTI and can cater for Pension Auto-Enrolment. This removes the burden of the additional work from the business so it can concentrate what they do best.
To find out more about Auto Enrolment, arrange a free trial of our payroll software or discuss the outsourcing of your payroll give our team a call on 0117 9353500