Auto enrolment: A common data standard is a must

With auto enrolment now about to take effect on the smaller-sized marketplace it’s good to see so many organisations backing the call for a common data standard, says Dawn Jackson, payroll product manager at Access Group.

At a recent Friends of AE meeting, Origo Standards, which has more than 25 years’ expertise in this area, also gave its support to this initiative, Project PAPDIS, which will prove vital to the success of auto enrolment going forward. As part of the Pensions BIB team [an informal collaboration of BCS Payroll Group, IReeN and BASDA HR & Payroll Special Interest Group] that initiated this project, I’m keen to see as many organisations as possible implementing the standard. And here’s why.

Auto enrolment is already a huge topic, and data transfer is only one small part of that. However, it’s an important element and by uniting payroll providers and pension providers we can be proactive in creating a solution for all. With only a limited time frame before we see a sharp increase in the number of organisations staging – which includes not-for-profit organisations as well as businesses – there is a real need to act now, with the highest peaks of smaller and micro organisations coming on board from 2016 to 2018.

With this in mind organisations should start thinking about auto enrolment early on, giving themselves a good 12 months where possible to prepare. Many may have already seen the public reprimand that Dunelm received from The Pension Regulator when it didn’t complete the auto enrolment processes required by the deadline. It’s a point that should be heeded, as the regulators have the power to impose fines if they wish and at some point may well do so.

This is why starting early is key to ensure all the necessary requirements can be met in time. And it’s also why at the Pensions BIB we’ve been busy getting feedback from the industry on the draft standard, so that we can release the full specification in plenty of time to allow software vendors to start incorporating it into their software for April next year at the earliest.

Having already received tremendous support for the initiative, it’s clear that everyone we’ve spoken to can see the sense in having a free and open data standard, available for everyone to use, if they wish to do so. It will make everyone’s lives easier in terms of transferring data between payroll software and the pension provider.

This will be critical, particularly when the number of companies staging is set to reach 130,000 or more each quarter. These smaller organisations may lack the resources to deal with the challenges of auto enrolment. Some will be looking to their accountant or payroll bureaux to help them out, so accountancy firms may find themselves on the front line alongside other advisers, and will need to be well prepared to help their clients. Many have already been speaking to their clients to drive home the importance of preparation. The Chartered Institute of Payroll Professionals (CIPP) will be holding events on auto enrolment to raise awareness and understanding which will help accountants to assist their clients in preparing for the changes.

We’d advise people to check whether their existing pension arrangement can be used for auto enrolment (don’t just assume it can) and to check to what extent their payroll supports auto enrolment. If organisations don’t feel they can manage the auto enrolment process themselves, then they could outsource to a payroll bureau. However, it would be prudent to check as soon as possible that their intended provider has the capacity to service them. Find out what contingencies and resources they have – or will have – in place.

And this comes full circle as to why it’s so important that we have the one data standard. Without it, not only organisations but payroll bureaux will face the complexity of dealing with a plethora of formats – if indeed they are available. A free and open data standard is a must to avoid this issue.

It has been amazing to see the payroll and pensions industries working together to at least simplify a small part of the auto enrolment process. We all have to be speaking the same language and standardisation will help to reduce unnecessary cost, complexity and to comply with regulation. As a result there’s less likely to be mistakes and it will take less time to complete the data transfer to pension providers - and surely that’s got to be good news for everyone.

 

Dawn Jackson is payroll product manager for integrated business software provider Access Group and member of the BCS Payroll Group.

AccountingWEB has launched the No-one gets left behind campaign to alert as many accountants as possible to the obligations implied by auto enrolment. Read our simple eight-point statement which sets out the auto enrolment facts you need to know.

Comments
Old Greying Accountant's picture

Huzzah ...    2 thanks

Old Greying Acc... | | Permalink

... a voice of common sense - it is imperitive that there is a single data standard that the pension regulator uses and that the pension providers use.

Pension providers have had enough cream from investors over the years to produce a standard so that payrolls can automatically transmit data to them alongside the pension regulator submission, FPS, EPS etc.

The admin burden on small firms wil promote non-compliance, not through will, but through inability to cope, in terms of expertise and finance, and the draconian penalties will drive large numbers of small businesses to the wall.

A common data standard and simple push button method of sending data to teh pension provider will hopefully offer some hope of avoiding that.

But, all this should have been sorted out years ago, one wonders why the vast salaries are paid to the people who devise these schemes, as frankly, time and time again they demonstrate at the expense of small businesses they are not competent to organise a piss up in the proverbial brewery, let alone the biggest change to business legislation ever.

SteveB@LPAES's picture

Common data standards

SteveB@LPAES | | Permalink

I don't think that pension providers have ever been tasked with talking t payroll on this scale before...certainly not within teh timescales that have now been set!

Pension providers also deal with their clients on a one by one basis rather than a bureau basis whereby one entity runs all the affairs of hundreds of pensions (not teh case with payroll as some bureau's run hundreds if not thousands of companies payrolls). Pension providers have never built it because they have never needed it.

Suddenly they now need it and they are having to move the tens of thousands of existing clients they have held on systems created in eth 80's onto a platform that payroll has built in the 2000's.

Pension providers are light years behind not because they chose to pocket the profits, such as they were from 1% AMC stakeholders that largely nobody joined and that break even after about 13 years, but because they have been investing in other areas.

This needs to change now and there is no choice if they want to stay in this market....looks like I just discovered a choice for them!! 

Old Greying Accountant's picture

@SteveB ...

Old Greying Acc... | | Permalink

... exactly, so if they had pooled their resources in a joint venture they could have all benefited.

The problems though are government made by the worst piece of legislation ever.

Simple anser, pay pension contribution along side PAYE, ring fenced in a specific fund, if employee wants to make alternative arrangements and annual sum is transferred to their approved PPP at the end of the tax year, just like opting out SERPS used to work.#

Let us not forget however the self-employed - what happens to them, they have been so screwed by tax raids, costly red-tape and time wasting bureaucracy, not to mention having used up their life savings keeping the business going because the banks stopped lending that they have nothing left to invest in their pension! 

SteveB@LPAES's picture

Common data standards

SteveB@LPAES | | Permalink

..well hopefully this will all be resolved later this year and the run in to 2015 will be a lot smoother than transferring .csv files from payroll to pension provider and back again!

I understand (as Co Chair for the Friends of AE in Bristol) that great progress has already been made in joining the whole system up already!! 

Matthew Walne's picture

Worst piece of legislation ever?

Matthew Walne | | Permalink

This has been hugely successful in Australia, Chile and Denmark. 

Given our ageing population and the burden on the State and our antiquated State Pension system not sure we had an alternative.

Not sure I would trust the Government to ring fence 20 million+ pension funds.

Old Greying Accountant's picture

@ Matthew ...

Old Greying Acc... | | Permalink

... you miss the point. I am not saying there shouldn't be a need for compulsory pension provision, I am saying the legislation is drafted in the worst possible way.

I am totally behind the ethos, it is the cack handed back to front red tape filled abortion of a piece of legislation that is my problem, which had obviously been drfated by civil servant who have not be let out enough. Had they consulted with those at the sharp end a far better way of achieving the results would have been achieved without drowning small business in red tape and the dire threat of extotionate penalties..

For the record my view is thus;

  1. Every employee should be auto enrolled regardless, except that any employer with all employee schemes in place equal to or better than the minimum standerd could be excepted.
  2. Contributions are paid to HMRC alongside PAYE, they are fowarded to a ring fenced pension pot a la NEST overseen, but not controlled, by the government.
  3. If employee has own scheme in place they can opt to have the contributions transferred at the end of each tax year, akin to the old opt-out on SERPS, or possibly even transferred monthly.
  4. If there is to be opt out, then employee notifies HMRC who inform employer via RTI to stop making deductions.

A simple single hub system, allowing small business to grow and drag us out of recession, instead of being mired in yet more red tape.

Matthew Walne's picture

Ok I see what you mean.

Matthew Walne | | Permalink

Ok I see what you mean.

I agree with point 1 whole heatedly. Point 2 would make no difference to the employer as far I could see. Contributions are paid to the provider alongside PAYE now. Point 3 would make it very expensive to administer and would push charges up on pension schemes at a time when costs are being forced down or the employer would suffer the cost burden. Point 4 is an excellent idea but surely they should inform the pension provider and not the employer as the employer is surely given even more work to do?