Auto-enrolment can seem daunting. Don’t bury your head in the sand! These are the things that need to happen:
- Find out your staging date and ensure that you have at least 6 months to prepare
- Engage your organisation and colleagues in the process
- Choose a scheme
- Operate auto-enrolment
- Do some financial planning
Trustees and directors, management and staff all need to understand the rules about contribution rates and opting in and opting out. Everyone needs to know when the scheme is going to start. They also might want a say in which provider is chosen. The organisation might want to take professional advice from an Independent Financial Adviser about which provider to choose. Also, there may be existing pension arrangements – some of these may be auto-enrolment compliant, some may not, or they may be able to be transferred to a compliant scheme. The existing provider should be able to advise on this.
Choosing a provider
There are a number of factors to consider:
- Scheme criteria – some providers may for example only operate schemes of a certain size
- Scheme cost – some make a charge to employers for operating the scheme, and some do not. They all make charges which are deducted from the contributions – these charges are usually in the range 0.5% to 0.75%.
- Whether compatible with existing schemes
- How they integrate with payroll
- Services that are included – e.g. communication with employees
There is a significant administrative burden on employers – for example assessing employees’ eligibility every pay period; dealing with postponements, opt-ins, and opt-outs; calculate the contributions; keep records and provide reports and output files for pension providers. This can only be dealt with by appropriate software. The possible solutions are:
- Use payroll software that has auto-enrolment capability. Most major software providers will be capable – but probably not HMRC’s own free software.
- Use a payroll bureau with auto-enrolment capability.
- Use an auto-enrolment solution provider – another third party business that provides middleware software that deal with the communication between the employer, the employee, and the pension provider.
- Use a pension provider that also provides the middleware.
The costs of the scheme need to be budgeted for:
- Employer contributions
- Pension provider charges to the employer (if any)
- Payroll/middleware costs
- Set-up costs and professional advice
- Management time to deal with the set-up
How can Slade & Cooper help?
Our payroll bureau can provide:
- Auto-enrolment processing
- Communications to employees & pension providers
- Linking to providers
Advice and training:
- Recommend an independent financial adviser
- Provide in-house training for staff and trustees