Recent research from The Pensions Regulator shows that only 21% of employers have taken steps to prepare for pensions auto-enrolment, and 48% plan to leave it as late as they can before deciding how they fulfill their obligations.
For those that have started planning for auto-enrolment or believe that they have understood the impact on operational processes and agreed a solution, more and more are becoming unstuck as they start to understand the intricate detail that comes with the legislation.
Few organisations are accurately factoring in the operational impact to payroll, the additional costs of changing business process, increased administration and the investment in technology be it a new solution or enhancements to existing systems.
It seems that employers really aren’t as prepared as they might think.
There is a lot that you will need to consider and issues that you will need to overcome in your preparation for auto-enrolment and selection of a solution. Here we take you through some of the areas you will need to think about.
Pension Reform is more than just enrolling employees into a pension scheme. You need to consider how your organisation and the solution you decide upon will achieve the following:
Along the way, there will be other unexpected issues that arise that you will also need to be able to deal with. It’s important to understand where the responsibility falls for the above.
For any organisation payroll is at the core of operations for pension auto-enrolment, as it’s only at the point of payroll calculation that you can determine an employee’s actual pay, establish if they pass the threshold set for auto-enrolment and calculate the contribution.
If you have a workforce with fluctuating earnings, or employees that are paid weekly, it will add another level of complexity and administration – it is in circumstances like these that payroll becomes even more critical.
There are a number of ‘hub’ or ‘middleware’ solutions being offered to employers, but they cannot work stand-alone. Without timely pay data from the payroll, they cannot make the most basic of decisions, such as who is to be auto-enrolled. They require significant interfacing to render them effective.
The processing of such interfaces will add more time to what may already be a squeezed payroll schedule, but more importantly, can be expensive to build and maintain, and add more complexity and risk than a solution that is built into your payroll.
…don’t wait until the last minute. You will need a team internally that includes payroll, HR, finance, IT and pensions. Engage early with your software and pension provider…Ensuring you have a thorough project plan is key.
If you think of all the internal teams that need to come together to work through the vast detail that the legislation brings (payroll, HR, finance, IT, pensions & legal), as well as the external teams involved (mainly your payroll and pension providers), The Pensions Regulator advise that employers should give themselves 18 months to prepare for their staging date, to carefully research, plan and implement a solution that will meet all of your business requirements for auto-enrolment.
Don’t underestimate how long it will take.
To implement a solution, Ceridian estimate it taking at least six months to get everything in place for your payroll alone. Pension and payroll providers will be extremely busy as more and more organisations will need them to help with preparation. So, the advice is to start early and engage with them now.
If you are a Ceridian customer, it’s important to engage with us as early as you can about your plans for auto-enrolment. Call us now on 0800 0482 737 or send us a message to start the conversation.
If you’re not a Ceridian customer, but your staging date is in 2013 or early 2014, and you would like to learn more about the legislation and see a demonstration of Ceridian’s solution, come along to one of our events being held in November and December 2012.
Or call us on 0800 0482 737
Has your organisation communicated to its employees about auto-enrolment?
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