Pension Reform – Employee Benefit, Employer Headache
Now that payroll year end is a distant memory and for many companies whose staging date for auto enrolment is passed now is a good time to reflect on the challenges that were presented. The government is encouraging all workers to save for their retirement and eligible employees must be automatically enrolled in a pension scheme.
There is no doubt that those companies who had to implement auto enrolment found it an onerous task and a distraction from their core business purpose. Many saw it as a "triple whammy" of increased costs, complex administration and not least legal compliance. Those organisations that are exclusively monthly salaried tend to have established pension qualifying schemes in place for their employees. However many medium sized businesses especially those with hourly paid weekly employees were presented with an obligation to procure and provide suitable contributory pension schemes for their employees. Eligibility is determined using a wage threshold and the age of the employee. This then must be determined for each employee as part of the payroll process.The government pension regulator allows auto enrolment to be postponed for up to three months to allow for temporary spikes in wages over the threshold. Also workers whose wages are less than the threshold can opt in to a scheme although in those cases it is not compulsory for the employer to contribute. An employer must correspond with its employees informing them of their enrolment status and opt out options. Interestingly an employee is always enrolled first before they can later opt out. If monies have been taken these then must be refunded.It follows that attempting to manage auto enrolment manually is impracticable for all but the smallest of companies.
Having been through the process with several clients there is no doubt that K3 Syspro Equator Payroll has stepped up to the mark in providing a comprehensive auto enrolment method from the calculation of eligibility ,the processing of postponements opt outs and refunds , the production of appropriate correspondence and not least the interface of the relevant information to pension providers.