AUTO-ENROLMENT PAYROLL GUIDE FOR EMPLOYERS. Pension reform data exchange guide

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1 AUTO-ENROLMENT PAYROLL GUIDE FOR EMPLOYERS Pension reform data exchange guide

2 Data makes auto-enrolment run smoothly Employers have a number of duties as part of auto-enrolment including assessment of their workforce, enrolment of eligible employees into the pensions scheme and making contributions. All of these duties are heavily dependent on accurate and up to date data. As early as possible you should think about carrying out a review of your processes with your payroll provider or, if in house, your software provider to ensure you can collate the required data on a regular basis to support your auto-enrolment duties. You should also understand how your pension provider can help. Why this is important A simple way to think about this in relation to auto-enrolment is Payroll will normally hold information such as the salary and National Insurance number of an employee HR would normally hold address details and contact information such as address So businesses need to think about how this data and the additional data required comes together each pay period reference period to manage the pension scheme and how data updates are captured. Top tips for data success Meet early on in the planning stage at least six months ahead of your staging date, to establish early on how you re processes and their products work together Think about the size of your workforce in relation to your new duties How do you plan on resourcing these in your business, the processes, systems you plan on using? It is important that you get payroll systems and processes ready ahead of your new workplace pension staging date and for your ongoing duties. As payroll timescales are often short, it is key that data leaves the payroll process for assessment is sent across in a standardised, easily replicable way so that is can be loaded, assessed and returned with minimal risk to the payroll run More data is required for auto-enrolment see page 4. You may find that this is held in more than one place for example through your HR process. Identify the gaps and consider and if some data will need to be inputted manually Think about the time required and resource against the cost for your business. Consider automation whether possible to ease the administrative burden Consider your needs especially if you have both weekly and monthly pay Don t underestimate how long data processing can take allow sufficient time to comply with the regulation You should be aware that it's the employer s responsibility to assess, make contributions and hold accurate data about their workforce. 01 Pension reform data exchange guide

3 Data as the key auto enrolment ingredient You will need to provide data each pay reference pay period to drive the assess eligibility, join and contributions processes of your auto-enrolment workplace pensions scheme. As long as employees remain in employment with you and are an active member of the workplace pension scheme, you will need to as the employer pay your own contributions as well as the eligible members contributions (if they need to make any) to the workplace pension scheme. Workplace pension scheme cycle Payroll data uploaded (Find out more in this guide) Data assessment made Employer and payroll file produced Employees joined and/or mandatory communications issued Each pay reference period Record keeping Data stored as part of record keeping duties Payment file uploaded Contributions collected and invested Opt out file produced Payroll can manage refund and update records Pension reform data exchange guide 02

4 How we can help the payroll process We ve designed and tested our approach to auto-enrolment with existing customers and through research with employers to make the additional demands of autoenrolment on your business as easy and straightforward as possible. We have provided functionality through our dedicated employer servicing platform Group Pension Zone to manage key tasks for you which you can factor into your approach with your payroll process. Our good to go online auto enrolment solution provides Tool to assess your workforce for auto enrolment Supporting step-by-step guides to help you carry out the processes Produce and deliver your mandatory communications is required Check and apply contributions to your Standard Life workplace pension scheme Automatically put in place the maximum three month waiting period Provide reports and opt out file to manage duties Assess your workforce on an ongoing basis Record all online processing to support record keeping requirements Data processing using our assessment tool If you provide a file to use our eligibility assessment tool, our system will validate the data to ensure that all of the mandatory fields have been provided. Our tool will then categorise employees based on age, pay reference period earnings and their scheme membership status. Outputs and actions Using the employee data that you upload, the eligibility assessment tool will categorise employees into high level categories: Employees already in a workplace pension (if you have one in place) Employees previously opted out of a workplace pension scheme Employees eligible for auto-enrolment Employees in a waiting period (automatically added with our solution) Employees who have opt in rights More investigation required (data needs updated) You can choose if you want employees eligible for auto-enrolment to be automatically joined or not if you want to review the output first. The output will include clear instructions for the next steps you need to take for each category of employees. Assisting payroll and mandatory communications From your file we will make sure eligible employees are included in your workplace pension scheme and provide a file back so your payroll solution can manage contributions and make payments to the pension scheme. For the next payroll you can download a system file of members who opted out or opted in so your payroll process can take into account for your next run. If you have selected for us to send your mandatory communications we will inform employees about their right to join if they want to. At the same time, we will issue all of the communications that need to be sent to workers and manage opt in and opt out processes and provide you with the appropriate information for managing refunds. 03 Pension reform processes and data exchange

5 Data requirements Auto-enrolment requires specific data to be exchanged between the pension provider, employer, HR and payroll, in order to administer the duties of the workplace pension scheme. If your payroll provider is doing the eligibility assessment for you this will reduce and simplify the information you need to send your pension provider. Where your payroll service is outsourced or your using bought in software, adaptions can be possible or new solutions offered to meet specific requirements, including auto enrolment but what is offered is likely to be varied and this will also depend on where and how you store some of your data and the processes you currently use. This data helps determine which workers are categorised as jobholders and which are workers. Information can then be exported back to payroll. That will enable contributions to be deducted and sent to us. This data will also be used to join any eligible employees to the pension. Overview of data Pay and contributions The payroll process should be able to manage the different types of pensionable pay auto-enrolment allows to calculate contributions our solution uses basic pay The employer should ensure that their payroll is able to make contributions and deductions every pay reference period from their automatic enrolment date and transfer the money to the pension scheme Calculating employer contributions taking into account possible different contribution rates and paying them into the pension scheme Calculating employee contributions according to the new requirements if employees are required to make these, making the deductions and paying them into the pension scheme Tax relief on contributions using our employer good to go pension s solution Employer contributions are business expenses submitted before you work out profit and tax Employee contributions are deducted after tax and National Insurance. Standard Life claims back basic tax relief directly from Her Majesty s Revenue & Customs (HMRC). For employees in one of the higher tax brackets they need to claim further tax relief by contacting HMRC Additional data requirements Employers should build into their payroll processes the ability to refund contributions deducted from a member who opts out during the 30 day opt-out period Ability to manage employees who are not automatically enrolled but choose to join the scheme The payroll process should also make it easy to manage new joiners and leavers for the business Pension reform data exchange guide 04

6 Data we require in more detail An overview of the data we require is provided below. More detailed guides and support are provided as part of our solution. Employee s personal details National Insurance number Name Gender Date of birth Employee retirement age usually between 55 and 75 Full address including postcode Contact numbers and address optional Employee s payment details If they are paid weekly or monthly Annual pensionable salary Employee auto-enrolment payment as a percentage if applicable Employer auto-enrolment payment as a percentage Payment frequency Employee s eligibility Amount of qualifying earnings payable in the relevant pay reference period If an employee is already in a qualifying workplace pensions scheme Date of joining company NEST Is employee being assigned to the Government s auto-enrolment solution NEST How we manage data transfers We use a common method of secure data transfer used by the thousands of scheme we administer every month called CSV files. What are CSV files? CSV files are a way of saving data from tables as plain text. Fields in the table are separated by commas. Records are separated by carriage returns. How do I produce a CSV file? You can create files from your existing payroll data. We can provide you with examples of CSV files. Payroll date that the employees regular payment will be deducted If the employees payment is on a salary exchange basis 05 Pension reform data exchange guide

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8 Section Standard Life Assurance Limited is registered in Scotland (SC286833) at Standard Life House, 30 Lothian Road, Edinburgh EH1 2DH. Standard Life Assurance Limited is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. GEN Standard Life, images reproduced under licence