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Auto Enrolment – 10 Steps to a Stress-Free Transition

For the first time since the beginning of the government auto-enrolment initiative, three employers have been issued with penalty fines for non-compliance by The Pensions Regulator (TPR). The three firms that have been hit with penalties are amongst 163 firms that have been issued with notices by TPR between July and September 2014.

Over 33,000 firms have begun the auto-enrolment process so far, with an estimated 1.25 million due to stage over the next 3 years. The latest penalties are just the beginning.  Despite the message to prepare early being hammered forward, TPR expect to see a number of employers failing to prepare themselves, either leaving it too late or simply failing to comply at all.

Every employer has a duty to enrol their employees into a pension scheme and contribute towards it. In preparing for this new law, there are a number of steps organisations can take to ensure a smooth transition.

10 Steps to a stress free transition

1. Know your staging date. Staging dates span a period from 1 October 2012 to 1 April 2017. The UK’s largest employers have already, or will need to comply first, and gradually smaller employers will be brought on board.

2. If possible, talk to other organisations who have already undertaken the processes necessary to comply with the new law – look at networking groups and forums for lessons learned and advice.

3. Select and adopt the right resources and tools to assist with the process. For example is this something the Payroll Manager can manage or does it need additional resource? Does your existing payroll software support auto-enrolment or will you need to review your provider?

4. Once your staging date is imminent, assess your workforce to understand who should be automatically enrolled, who can opt-in, and who is an entitled worker. This process is one of the most important but also potentially complex. Auto-enrolment only applies to employees who are classed as Eligible Jobholders – those employees who are between 22 and state pension age, and with earnings over the auto-enrolment threshold.

However Non-Eligible Jobholders (those employees aged between 16 and 74, with earnings below the auto-enrolment threshold, but above the qualifying earnings lower threshold or, employees aged 16 to 21, or state pension age to 74, with earnings above the Auto Enrolment Threshold) can opt into a qualifying pension scheme.

A third category, Entitled Workers, who earn less than the qualifying earnings lower threshold, must be provided with information on their right to join a pension scheme. It doesn’t need to be the same pension scheme used for auto-enrolment and the employer doesn’t need to contribute to the scheme.

5. Review your pension arrangements to ascertain whether they are suitable, can be extended or need to be replaced. We have an application that will help any company export data to their pension provider within Pegasus Opera II and Opera 3. The utility enables all the data required by the pension provider to be collected from various locations in Opera, saving critical time and ensuring the correct information is sent. Should the need to replace your pension provider arise, this application integrates with a number of different pensions providers including Aegon, People’s Pension, Aviva, Scottish Life, Scottish Widows and many more.

6. Communicate the changes to all workers according to the guidelines set out by The Pensions Regulator. The law requires you to write to all employees informing them of the changes, but look at the best channels for the size and culture of your organisation. For larger companies, seminars, e-mail updates and a dedicated point of contact for enquiries might be appropriate, while smaller organisations may feel that a one to one approach is more suitable.

7. Automatically enrol your Eligible Jobholders. Your payroll software should complete this task seamlessly.

8. Enrol Non-Eligible Jobholders who choose to opt in. Again, your payroll software should complete this task seamlessly.

9. Register with The Pensions Regulator and keep records, a process which is required by law. Your payroll software should automatically maintain records so that they are available on an ongoing basis.

10. Contribute to your employees’ pensions. You will need to collect the contributions from your employees and also make your employer contribution to the pension scheme. The contributions will need to be sent to the pensions provider by the 19th day of each month following the collection of any contributions.

For more information about how Synergy can help prepare you for auto-enrolment or to learn more about how Opera 3 caters for the process, please contact Synergy Technology on 0845 456 0050.