14 pensions


Navigating pensions auto-enrolment


For Britain’s biggest employers, such as Asda and Sainsbury’s, pensions auto-enrolment (AE) went live in October 2012, with many thousands of smaller employers coming on stream from 2013. PwC’s Richard Smith explains that navigating this new legislation can be highly complex. More than just an extra pensions cost, AE represents a major operational challenge for employers


There’s no one-size-fits-all solution to managing AE. Some employers are designing their own solutions while others are either tailoring existing internal systems, or reviewing the services of their existing pension, HR and payroll providers with a view to taking the best that each has to offer.


At PwC, we are aware that deciding which approach to use can be daunting, so to help employers we have developed a methodology to assess whether they have a compliant and effective solution in place to manage the challenges that lie ahead. We call this the “Seven Pillars of auto-enrolment operational effectiveness”.


What are the seven pillars?


1 Worker assessment Workers and non-workers must be correctly identified, and each worker entered into one of the defined worker categories. This is a critical process, as all subsequent responsibilities will be dictated by the relevant worker status. As straightforward as this approach seems, potential problems lie in the definitions of certain elements of Qualifying Earnings, and challenges will be thrown up by internationally mobile employees and those workers who are not employed.


2 Contributions


Contributions need to be calculated, deducted, possibly paid across under salary sacrifice, potentially withheld, and paid to pension providers within defined timescales. The start dates for contributions will vary according to the statutory requirements for each enrolment scenario.


3 Communications


The legislation sets out strict requirements as to the timing and format of communications that need to be issued to the different categories of worker. Processes must be designed effectively to ensure all requirements are met within the prescribed timescales while ensuring communications are effective and cost-efficient.


It’s


important not to overlook those who www.businessmag.co.uk


are already in existing pension schemes. Employers must also define the pre and post AE communication experience. The role that communications play in AE and the wide variety of potential communications required should not be underestimated.


4 Ongoing monitoring


Many workers will need to be subject to regular ongoing monitoring in each pay reference period to ensure that all obligations are met should their circumstances change.


launching a number of AE arrangements, we have developed this tried and tested methodology.


If this key pillar is


missed, it is likely that the employer will non-compliant with a number of their key obligations.


5 Scheme membership changes


An area that can easily be overlooked is the need to have effective processes covering those workers who opt out, leave the scheme, or move between employer schemes (where multiple schemes are available), choose to opt in, and so on. Again, there are prescribed timeframes for actioning these changes which can be complex.


6 Compliance


It is essential that employers can prove they are administering AE’s numerous tasks in a compliant manner. The pensions regulator can impose significant penalties and possibly apply criminal charges to employers who do not comply with the legislation. It is important for an employer to be able to rely on their payroll and pension providers to deliver a service which means their HR operations remains compliant.


7 Record-keeping


Accurate and efficient record-keeping systems must be in place to capture and retain key pieces of information and documentation, linked specifically to individual workers and more generally to the processes undertaken. Employers will need to identify what responsibilities will be attached to all providers involved.


As a result of the work PwC has done to support employers in successfully


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – DECEMBER 12/JANUARY 13


Using this approach will enable employers to identify the extent to which their payroll, HR and pension systems are able to take up the strain that operational compliance presents.


How PwC can help:


• provide an understanding of the role that your existing pension and payroll providers can play in the operation of AE and how they will align alongside the ‘Seven Pillars of AE’


• review your pension provider, assessing the appropriateness of their solution for your AE population


• articulate the challenges that your pay patterns and practices along with your worker profile will create


• identify opportunities to save costs and minimise the administrative requirements of AE.


Details:


Richard Smith 0118-9383545 richard.w.smith@uk.pwc.com


Debra De’Ath 01895-522035 debra.a.death@uk.pwc.com


Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40