I am writing in the context of an accountant in industry, with one payroll to run. (and can only imagine the difficulties practitioners must face).
At the moment I can run my payroll two days before payday - to allow for the three day BACS cycle.
With AE - I would need to establish if I had any new joiners to the pension, and make appropriate deductions, within that period. Surely I can't be expected to actually get the employee into the scheme during that time? This normally involves meetings with the IFA, who then sets them up with our current scheme?
Do I make a deduction, hold it, and then hope the paperwork is completed prior to paying over by 19th of the following month?
I don't stage until 2016 - but want to try and keep ahead etc.
Thanks.
Replies (15)
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Automatic
From the point of assessment, you have 6 weeks to get an employee into a scheme. Note that if a monthly payroll is paid for the calendar month, their point of assessment is the 1st, even if they're not paid until the end. That may mean you're down to 2 weeks to do it all. You can take contributions before the employee is a member of the scheme; in fact, for variable payrolls, it is inevitable.
If you take the money and the employee doesn't become a member, you have more problems than just taking the money - you've not automatically enrolled someone when you should have and now you're in breach of those rules, as well as taking money that shouldn't have been taken.
Auto enrolment is intended to be automatic, which means the employee can't be required to make any decisions as part of being enrolled. The employer must be able to make all decisions on behalf of the employee. You'll need to ensure you have a system in place to do all of this in the timeline the regulator defines and there's no way around it. You'll likely end up with a system that involves sending a CSV file to the pension company or IFA, particularly if staff turnover is high or wages are very variable.
Check your scheme
Tom
You need to get your IFA involved asap and get them to check if the scheme is AE compliant and if not what other options do the current scheme provider have.
Steve
I'd definitely recommend an automatic 3 month postponement for all new starters - you will have to generate the letter to inform them of this, but it gives you a longer timescale to work with, and also saves you a lot of work if the employee doesn't end up staying with the company very long.
Any other thoughts on postponement. We went live in April and I opted for the 3 months postponement as I thought it would be easier.
6 months in I have now convinced myself that postponement is actually causing me more trouble. For example I use Moneysoft and People Pension. Neither seem to do correspondence, so when I have a new start I keep a list in excel of start date/deferment date etc - I then need to keep referring back to this list every payroll to remember to after 3 months include the new start. Eventually I will lose track and miss/forget someone
I am now thinking easiest option is auto enrol everyone from 1st payroll - if they opt out or leave fine, they get a refund - it is easy enough to administer a refund through the payroll software.
cheers
mick
Postponement is actually causing me more trouble
Mick its great to see your comments and lets hope more people take notice of what you said, it would be really good to compare your contribution savings against the amount of time you have spent on the work arounds.Any other thoughts on postponement. We went live in April and I opted for the 3 months postponement as I thought it would be easier.
6 months in I have now convinced myself that postponement is actually causing me more trouble. For example I use Moneysoft and People Pension. Neither seem to do correspondence, so when I have a new start I keep a list in excel of start date/deferment date etc - I then need to keep referring back to this list every payroll to remember to after 3 months include the new start. Eventually I will lose track and miss/forget someone
I am now thinking easiest option is auto enrol everyone from 1st payroll - if they opt out or leave fine, they get a refund - it is easy enough to administer a refund through the payroll software.
cheers
mick
How do you meet the regulations on storing communications as I no Money Soft does not have the capability ?
Postponement should be used to match pay periods or to bring in line with accounting periods .Postponement has not been put in place to as a contribution saver
You have to be ready from day 1 of staging date ...
I agree can be useful to align pay periods but if trying to use the maximum 3 months, then you have the extra comms to deal with and your employees can ask to be assessed (and possibly enrolled) on their original assessment date anyway. The inertia that government is relying on to keep people in when they wouldn't have actively joined acts against this but anyone who realises they are giving up "free money" from their employer for the postponement period would surely ask to join.
@Mick Milne
I am now thinking easiest option is auto enrol everyone from 1st payroll - if they opt out or leave fine, they get a refund - it is easy enough to administer a refund through the payroll software.
This is the approach we've taken. Our client uses NEST and does their own communications. Adding postponement to the mix would add a big admin overhead for both of us.
When someone joins, they are given a generic letter explaining the workplace pension and that they'll be autoenrolled if they meet the criteria. Assuming they are 22 or over, when their earnings reach the trigger point we autoenrol them. NEST sends their welcome pack, job done.
Most of the staff are only on minimum wage; the opt-out rate is <10%. Mostly they opt-out immediately and we just refund the contributions via payroll. Only once had we actually paid the contributions to NEST, who refunded straight back to the client's account.
Auto Enrol .....
......means just that! The intention is for everyone to be enrolled.
As one who has been through the wringer earlier this year, I can advise that you should only need an IFA to help choose an appropriate scheme - and if you are only going to be contributing the statutory minimum then it will probably be Hobson's choice ie. NEST (as you won't be an attractive financial proposition to any pension provider unless you're dealing with high earners).
The Employer merely needs to communicate to staff individually in writing in the run-up.
Next, once you have configured your upgraded payroll software, it assesses each employee at the time of payroll run and will automatically deduct contributions where appropriate. No paperwork involved. Like it or not if they earn enough and fit the age criteria - they're "IN".
Software produces a csv file to upload to the provider's website and they send out joining paperwork to the staff, who can only then choose to opt-out.
Jeff
Cautionary note.....
A three month postponement will mean from the 1st to the end of the month....payroll normally runs from the 6th to the 5th of the month so if you do not align postponement with payroll period or visa versa then you will end up losing a month of your postponement and assessing for the first five days of the month you thought you had postponed!
Enrolment is different to assessment and contributions for first time enrolees can be delayed beyond the normal 52 day deadline for payments with the providers agreement. This makes the opt out/refund process simpler
So yes find an adviser....but find an adviser who knows auto enrolment not one who just knows how to apply for a pension!!
You can always change your mind....
Postponement can be something you adopt on a case by case basis so feel free to change your processes if this suits.
I think that you are right ....Postponement is "sold" as the solution to needing more time and in some instances can use up more of your available time instead!
It's all in the preparation and the initial decision making....come to the party late and companies may decide in haste and repent at leisure.
Pro's and Con's
Contractual enrolment means no assessing and limited comms. It means no preset re-enrolment and a much shorter paper trail.
However this also means that the pension scheme and all its details (contribution levels etc) will be hard wired into an employees remuneration.
This means that a change of pension rule may mean a change of employment contract.
We have used contractual enrolment with a small number of our clients and it works well for an employer whose approach will be to try to get everyone into the pension scheme and saving for their retirement. It will not "just make the paperwork easier" though so it's worth weighing up teh pro's and con's.
By the way it's really good that you are feeling more positive now as most of the people who comment in these threads do so to educate, assist and inform others based on their experiences. They also do it to learn themselves and it's great when people start a thread and get a good result as a consequence.