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Auto-enrolment compliance

In a recent article for Payroll World Magazine, Ceridian’s Chief Product and Innovation Officer, David Woodward, warned employers their systems may fail to comply with auto-enrolment – resulting in fines and prison sentences.

Pension auto-enrolment for larger employers will start on 1 October 2012, with smaller employers with less than 250 employees being phased in after February 2014. To ensure compliance; payroll, HR and pensions administration will need to be integrated.

Each eligible employee aged between 22 and state pension age must be auto-enrolled into an employer’s qualifying pension scheme when their salary exceeds the annual salary threshold of £8,105.

David explains how payroll is central to this process:

The point at which auto-enrolment will be triggered is when a qualifying employee crosses the pay threshold during a payroll calculation process. To reduce the risk of non-compliance with the new legislation, the core functionality to auto-enrol an eligible employee must be integrated within the payroll system at the point of payroll calculation.

The payroll system will also need to support auto-enrolment by, for example, identifying eligible employees, handling opt-out/opt-in requests and refunding contributions when due.

The Department for Work and Pensions estimates between five and eight million new savers will contribute to a workplace pension following auto-enrolment, yet research by the Pensions Regulator suggests that 46% of employers will leave it to the last minute before considering complying with the reform.

The Pensions Regulator has warned employers to be under no illusions that compliance will take time and they will need to adapt ‘their payroll, HR, pensions and IT systems’ so employers need to act now.

Read previous Connection articles to learn more about Pensions Reform and automatic-enrolment:

As a principle member of the HMRC consultation panel on Pensions Reform, we understand the financial and administrative impact of this new legislation on UK business and are uniquely positioned to guide you through it with our Pensions Solutions. Send us a message or call us on 0800 0482 737 to see how we can support you.

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