20 pensions
How to ease pressure of auto-enrolment
There are less than nine months to go before the first wave of auto- enrolment pension rules come into play for the UK’s biggest employers, and many are now starting to realise how complex the administration process will be. To ease the pressure on your company it is important to have dedicated, joined-up support from your payroll and pensions providers to help you address these challenges at an earlier stage, explains Peter Woods, south east head of pensions at PwC
Onerous requirements
Many businesses have not fully understood the complexities of the auto-enrolment requirements. Most (but not all) employees will need to be enrolled into a qualifying pension arrangement. Working out who needs to be in and who doesn’t is not straightforward and the answer is likely to be different for each pay period. You will then need to process opt-outs and keep a record of them so you can automatically enrol them back in every three years. Add in the fact that many employers are looking to use different pension vehicles for different parts of their workforce and you can start to see how operationally complex it could be.
Put pressure on your providers
PwC have recently conducted interviews with a number of providers of HR, payroll, pension and flexible benefits systems and services.
The two main themes that employers need to be aware of are: • Readiness: Providers aren’t planning to launch their auto-enrolment solutions until the summer. This could mean you’ll face significant time pressure to have everything in place by your staging date. • Integration: Different providers, such as payroll and pensions, aren’t really working together so you need to make sure that your different providers’ solutions will work together
successfully and meet your specific pay and process requirements.
Our experience shows that considerable support will be needed from your payroll function and pension providers to help you comply with the auto-enrolment requirements. Two key planning questions arise: • When will your providers be bringing new solutions to market to support you? • What priority will your providers be able to give you alongside their many other clients?
The timeline below shows the number of employers needing to comply each quarter through to Spring 2014.
How does this affect you?
Companies in the different staging date tranches will be affected by these issues in different ways.
By April 2013 – more than 6000 employees There are 600 or so employers who must comply by April 2013 that should expect significant early adopter pain. Many of the providers may find it difficult to support you in tackling the administrative challenges you’re going to face. The UK’s biggest employers are currently uncovering some real complexities in the regulations around the new duties to: • assess and monitor, on a pay period by pay period basis, which members of staff should be auto-enrolled, and which have a right to opt-in to the pension scheme, and
• issue the right statutory communications to the right people within statutory timescales.
Post April 2013 – fewer than 6000 employees
If your company has a post April 2013 staging date, a worry for you will be getting lost (from your provider’s perspective) among the many hundreds of employers complying each month. Employers with between 250 and 500 UK workers will be among thousands of others introducing auto-enrolment during the first few months of 2014.
Making best use of your provider support
There are different ways of working with your providers to help you identify which workers qualify for auto-enrolment and communicate the changes to them: • Several pension providers are building sophisticated solutions to carry out your worker identification and communications for you. So you should find out exactly what your pension provider is planning. If they are developing new solutions make sure it will interact with your payroll function every pay period. We’d recommend that your payroll team plays a pivotal role in these discussions. • Alternatively, you can retain more control by assessing and communicating with staff yourself from within your own HR and payroll operation. If this is your strategy, find out what facilities your HR and payroll providers are developing to support you.
What to do next?
If you’re a larger employer, you’ll probably already be assessing your future pension costs and devising a strategy to comply with the auto-enrolment requirements. In addition, you should: • Understand the detailed requirements: Consider which types of employees are likely to give rise to technical complexities. • Engage with all your different providers: Share with them your proposals for complying, understand their plans, and how their solutions will work together for you. • Devise a communications strategy: Define the different audience segments within your workforce and relevant messages for each. Consider starting to communicate now. • Make a detailed implementation plan: Understand the different strands of work needed to comply by your staging date, and secure both internal and provider resources.
To register for our Pensions Auto-enrolment seminar on February 23 in Southampton, please contact:
amritjot.dhaliwal@uk.pwc.com
Details: Peter Woods 0118-9383533
peter.j.woods@uk.pwc.com
* Source: The Pensions Regulator, Press Release PN11-10, May 17, 2011 ** Source: BIS (Department for Business Innovation & Skills) and National Statistics, Business Population Estimates for the UK 2010, May 24, 2011
www.businessmag.co.uk THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – FEBRUARY 2012
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