Auto-Enrolment & Payroll
In a new report issued by the National Employment Savings Trust (NEST), payroll integration is identified as one of the key operational challenges that concern employers most.
After the increased burden of on-going day-to-day pension related administration, payroll integration is the main operational challenge for almost a quarter of large employers.
As these organisations are among the first to be affected, the level of focus placed on the more specific operational challenge of payroll could reflect the likely complex nature of large employers’ arrangements, which often have different groups of workers on varying terms and conditions.
However, it also clearly demonstrates the experience these companies have gained in their preparations, which smaller organisations can learn from.
- The single biggest lesson learned from the early staging companies, is that auto-enrolment is a business issue, not just a pensions one. Ensure that you make your decisions on Pension Provider and scheme design in conjunction with a review of your payroll (and HR) systems capabilities; so that you get the right overall solution for your business. There is no single answer out there…
- Auto-enrolment is a highly complex piece of legislation with far reaching impact on a wide range of business functions, in particular payroll operations. Some of the earliest stagers have spent two years and six-figure sums implementing (often bespoke) solutions; clearly not transferable or scalable for smaller businesses. Calls for simplification from business and industry experts have at last reached the Minister for Pensions who has conceded that the rules may be too complicated.
- No auto-enrolment solution external to payroll can function stand-alone; yet no industry wide data standards currently exist for auto-enrolment which means that each provider (Pensions, Flexible Benefits or Middleware) has their own. Experience shows that these providers are setting an expectation that payroll will bespoke data exchange mechanisms to support their requirements. Suppliers are all working with a finite amount of resource in a climate of unprecedented, ever increasing demand so this isn’t a sustainable expectation. One way of resolving this is to do some/all of the assessment and communication within your payroll system. Ensure that you map out which system does what as early in your project as possible.
If you are interested in finding out more about the operational impact of auto-enrolment on payroll, and more lessons learnt, view the recording of a recent webinar held by Payroll World and Melissa Goddard, Director of Pension Solutions at Ceridian.