It is essential you critically assess both your pension and payroll provider at the planning stage to ensure they can deliver your auto enrolment requirements. It is important you meet them both to agree together how auto enrolment will operate for your business. Following auto enrolment both providers will have to work together in a different way so it’s necessary to agree responsibilities at an early stage to ensure you are less likely to run into problems later on. Agree what systems they will both use to transfer information, and are they compatible? How will data be transferred, and which provider will be responsible?
For an employer to fulfil their legal auto enrolment obligations both payroll and pension providers must deliver the service level agreements agreed at the planning phase. Richard Porter, Auto Enrolment Specialist Adviser at Visionary Accountants said: ‘we have managed auto enrolment for over 20 clients so we know how important it is that payroll and pension providers work closely together. We recommend that before employers do anything they check that their payroll provider’s software can deliver an auto enrolment solution for their business. To switch payroll providers or upgrade your payroll service during the auto enrolment project is costly. It could also delay your auto enrolment staging date, and put your business in danger of non-compliance. ’
Payroll transfers the key information that allows employers to comply with the auto enrolment legislation. Payroll is also responsible for ensuring that the correct pension payments are made to each employee at each pay roll date. Payroll providers need automated systems to deal with these functions.
Some companies have already been fined by the Pensions Regulator. Dunelm Soft Furnishings Limited failed to comply with its auto enrolment duties and was forced to rectify an underpayment of £143,000 in pension contributions in April 2014. (Employee Benefits, www.employeebenefits.co.uk, 25/4/14)
Richard Porter said: ‘Results from the 2013 Employee Benefits/Capita Pensions Research 2013 found that more than half of employers recommended starting auto enrolment early. This supports the findings of the clients we have worked with. Many of them had to upgrade their payroll solution during their auto enrolment project which ultimately delayed their staging date. At the end of the day it is the business owners risk and cost so make sure your payroll provider can deliver.’