7 automatic enrolment tips from companies who have already staged

Transcription

1 7 automatic enrolment tips from companies who have already staged IRIS has already helped 1,600 businesses to stage for automatic enrolment, assessing over 400,000 employees in the process. This useful guide contains 7 tips from these businesses to help you prepare for automatic enrolment.

2 Background to automatic enrolment People are living longer, with healthier lifestyles; as a result the ratio between the workforce and those at a pensionable age is decreasing. People are also planning and saving less for their retirement. The government estimates that around seven million people are not saving enough to give them the retirement income they want or expect. The current state pension cannot sustain this change so as a result, workers are being encouraged to save for their retirement through workplace pension schemes. The Pensions Act 2008 established new duties on employers aimed at tackling these issues and the changes began to be rolled out to businesses in October Legal information This information doesn t constitute financial, investment or professional advice and shouldn t be relied on as such. IRIS do not make any personal recommendation or give advice to employers and their workers on how to make investment decisions. If you are seeking this kind of advice we would suggest speaking with a qualified financial adviser.

3 1) Prepare at least 12 months before your staging date If you are worrying about automatic enrolment you re not alone - over 44,000 businesses will be staging in the next year and 450,000 in With so many tasks that must be completed to achieve automatic enrolment compliance it is important to give yourself time to prepare properly. This way you can avoid rushed decisions that are later regretted. The Pensions Regulator recommends you start to prepare 12 months before your staging date. Find out your staging date by visiting The Pensions Regulator website: Once you know your staging date you should start thinking about the steps you need to take to make sure you will be compliant. You can use the below timeline as a basis for your preparation:

4 2) Compliance isn t optional Unfortunately, some businesses that have already staged for automatic enrolment have learned the hard way that The Pensions Regulator is taking non-compliance very seriously and will fine businesses who don t meet their obligations. Dunelm Soft Furnishings hit the headlines for all the wrong reasons earlier in the year, and faced a bill of 143,000 for underpaid pension contributions when it got automatic enrolment wrong. The Pensions Regulator also revealed in October that it had started to issue the first fixed penalty fines of 400 with executive director for automatic enrolment, Charles Counsell, stating: As we deal with smaller employers, we will see more who, despite our message to prepare early, leave it too late or do not comply at all. This type of non-compliance is not acceptable. We expect to see the number of times we need to use our powers increase. On top of the fixed fine, daily fines can also be issued: Number of employees Daily Fine , , , Key points: You must be ready, by your staging date, to automatically enrol eligible employees onto a pension scheme. You must give details of how you have complied with automatic enrolment by completing a Declaration of Compliance. The deadline for completion of this is 5 months after your staging date.

5 3) Keep things simple Automatic enrolment is complex and there is lots of legislation governing what businesses must do and aren t allowed to do. This doesn t mean, however, that you need a complex process for handling automatic enrolment. In fact businesses who have already staged for automatic enrolment agree that the key to success is keeping your processes as simple as possible. This means having a complete solution that will manage all of your key tasks automatically, rather than several different systems which involve human intervention (leading to human error). Trying to handle things manually or with numerous different systems can add as much as 3.5 days per month to your workload! Having the right software in place is vital and The Pension s Regulator recommends asking providers whether their software will handle the following tasks: 1. Assessment of workforce 2. Postponement 3. Calculates pension contributions 4. Opt-ins and joining 5. Opt-outs and refunds 6. Generating communications to staff 7. Keeps records 8. Interoperates with some or all pension scheme providers Leading accountancy firm Haines Watts is managing automatic enrolment for 3 of their clients and with many more to follow they need a straightforward automatic enrolment process: Everything has gone very smoothly. The software is doing all the assessments correctly and is enrolling the right people at the right time and making the right calculations. We are also using IRIS OpenEnrol which makes it so easy to get the right pensions communications sent to employees. Everything is kept up-to-date without us having to manually produce the letters another big time saver! Linda Bowley, Senior Payroll Manager, Haines Watts

6 4) Payroll is central to auto enrolment success In order to be effective, automatic enrolment must take place in payroll. Payroll has access to employees PAYE information, and runs the calculations which must be completed before employee assessment can occur. It is only logical that the assessment process should also take place within payroll, to make the process as efficient as possible. On top of this many businesses will have fluctuating workforces with employees on zero hour contracts, temporary staff and seasonal overtime hours. This means an employee who hasn t been eligible for automatic enrolment in one pay period can suddenly fall into this category in the next pay period. Sandra Crawford from Silverstone Circuits explains the benefits of assessing employees within the payroll for their business: We use a lot of zero hours staff so some months they may not be earning anything and then for the next 3 or 4 months they would be assessed as over the limit. Every time I run the payroll it re-assesses employees. I get notifications every time and the information is all there. Providing communications to employees and deduction information to your pension provider at each pay period is also vital and must be generated by payroll. The IRIS AE Suite is slick. It does everything it needs to do. We believe the right place to do automatic enrolment is in the payroll and IRIS actually does the assessment and communications for you. Alan Chaplin, First Actuarial The diagram below shows the simple 3 step process of using a payroll solution such as the IRIS AE Suite for managing automatic enrolment. Handling things manually or with other software can lead to 10 steps:

7 5) Test, test, test Ensuring your systems are ready in plenty of time for automatic enrolment will be key. Make sure the information you hold about your employees is correct and up-to-date and that your payroll software can produce a pensions output file in the correct format for your pensions provider. The Pensions Regulator s website states: Inaccurate records or missing data can have serious consequences, which can include staff being automatically enrolled at the wrong time, information about automatic enrolment not getting to the staff member, and the wrong amount being paid to your staff at retirement. It is your responsibility to ensure that records are correct and up-to-date. Allow time for software updates to be installed, if required, and make sure your software is configured correctly for your specific pension scheme. It is important that you have the correct training on any new software so that you are able to use it in time for your staging date. The last thing you want is for your staging date to arrive and to realise things aren t working as you they should. It is always best to test your systems and iron out any issues prior your staging date instead of trying to rectify problems later. Remember: There is likely to be a lead time for getting any new software configured Check whether there is a standard output file for your chosen pension provider or if a bespoke file will need to be created. Additional time will be needed for any bespoke work Make sure that anyone likely to use the software (including employees providing holiday cover) receive the correct training Has your chosen solution been tried and tested by others? Make sure your software actually does what it claims to do or you may end up with lots of additional manual work

8 6) Work with trusted advisors With automatic enrolment being so vital to get right it is important to make sure you work with the right providers and there are a number of sources you can turn to: The Pensions Regulator The Pensions Regulators website contains lots of useful information such as a Staging Date Calculator. It also lists the key tasks you need to complete and when you should be looking at doing them. Independent Financial Advisors (IFAs) IFAs can provide advice to your business about getting the right pension scheme for your business and employees. They can also provide advice to your employees about investing in pension schemes and expected outcomes. Pensions Providers Not all pension schemes will be suitable for automatic enrolment so it is important to choose a scheme that meets the legal requirements set up by The Pensions Regulator. NEST is the pension scheme set up by the government and has a public service obligation to accept all employees onto the scheme. Payroll Companies Make sure you work with a payroll company with a proven track record of handling automatic enrolment within their software and who can provide you with the training and support that you need. It is important that your payroll provider has close relationships with The Pensions Regulator and pension providers such as NEST.

9 7) Take the opportunity to streamline other processes Introducing automatic enrolment is the perfect time to look at how you manage other processes within your business and see where you can save time and ultimately money. If you have had your payroll software for a while it may no longer be set-up in the optimum way for your business needs for example there may be quicker ways to get your payroll data into your software for processing. Booking consultancy is a good way to check that your software and processes are still working in the best way for you. We contacted IRIS and arranged for a specialist to visit us for a Best Use Assessment day. This was a great help as the IRIS consultant was able to highlight functionality in the software which we were unaware of and has made my life so much easier. Sue Tazey, Payroll Administrator, Portland College One way to streamline your automatic enrolment communications is to use online technology to instantly publish letters to employees electronically. This same technology can also be applied to pay information so that instead of printing paper payslips, stuffing envelopes and posting to employees you can publish the information instantly. Employees will be able to access pay and pension information at the same time from a smartphone, tablet or PC. IRIS OpenPayslips has saved us at least 20 hours every month. The cost savings are immense we are saving on the cost of payslips, envelopes, postage and time. The saving is far more than the 1.73 a month estimated by IRIS. We run a lot of weekly and monthly payrolls and all employees receive their payslips in the Cloud. It s an excellent system Colin Taylor, Partner, Donald Jacob & Partners

10 IRIS Automatic Enrolment Solutions IRIS are UK payroll experts whose software is fully compliant with automatic enrolment legislation. IRIS have already assessed almost 400,000 employees for automatic enrolment. IRIS can help you prepare for automatic enrolment in the following ways: Education IRIS is holding Understanding Automatic Enrolment seminars across the country, as well as online, to help educate you on the legislation surrounding automatic enrolment and what impact these changes will have your payroll and your company. The seminar was thoroughly useful and informative. Suddenly automatic enrolment seems so much clearer Jodie Fox, Senior Operations Manager, Stressline Compliant software IRIS have developed the IRIS AE Suite to make complying with the new legislation as easy as 1,2,3. It works with all IRIS payroll software to make your automatic enrolment processes completely automatic. 1. Assess your employees. This can be done instantly each and every pay period. 2. Process your payroll with IRIS Software and send pension information automatically to providers such as NEST and NOW. 3. Instantly publish compliant pension communications to relevant employees. The software will work out which ones need to be sent and when so that you don t have to. Employees will be able to access letters directly on their smartphone. For a complimentary online demonstration of the IRIS AE Suite call

11 About IRIS With 30 years' experience, IRIS provides business critical software and services to the UK SME sector and accountants in practice. Over 53,500 small and medium-sized companies including 15,500 accountancy practices rely on IRIS every day to run their business and collaborate, with around 82,000 endusers subscribing to IRIS cloud solutions. IRIS Software Group is the number one solution provider for RTI and its software pays 14 percent of UK businesses that operate under PAYE. All customers receive the greatest choice of RTI payroll software and services managed under the brands IRIS and Earnie. IRIS has developed a complete solution to help businesses prepare for automatic enrolment. This includes compliant payroll software, the IRIS Automatic Enrolment Module to handle your employee assessment, IRIS OpenEnrol to handle your communications, pension output files, training courses, free guides and more. Get in touch today to see how IRIS can help you prepare for automatic enrolment. Call us: us: sales@iris.co.uk Visit us: iris.co.uk/autoenrolment Follow us on