AE compliance – your business may be at risk
The Pensions Regulator takes non-compliance with automatic enrolment very seriously, and will enforce against employers who fail to give their staff the pension they’re due.
To ensure ongoing compliance with pensions legislation there are certain tasks that an employer must do every time payroll is run.
The Pensions Regulator
During its increasing number of spot checks on employers The Pensions Regulator (TPR) has been uncovering many instances where the correct procedures are not being followed. This can result in further investigation by TPR.
Not following the correct procedures can result in the following:
- A compliance notice being issued
- A fine being issued
- Employer and employee pension contributions being backdated to when the employee became eligible to be automatically-enrolled.
What’s procedures are not being followed?
- Opt-outs not being processed correctly
- Statutory communications not being provided to employees within specified deadlines
- New employees not being assessed
- No action being taken for employees on their 22nd birthday
- No action being taken for employees whose income increases to about £833 per month or £192 per week
- Payments not being deducted by payroll
- Incorrect tax relief method being used
- Payments not being paid over to pension providers on time
What’s the risk?
The more employees you have the higher the risk that some of the above may be missed.
If you have a few employees whose earnings are all above £10,000 per year and a low staff turnover these procedures can be managed manually. You just need to remember to contact WPD for guidance each time you have staff changes.
If you have more than ten employees, have a high staff turnover, or have employees whose earnings fluctuate from month to month around £833 the risk is too high.
In our experience the only way to guarantee ongoing compliance is to have it all integrated into payroll. All of the payroll software providers have inbuilt tools, which, if used correctly, take care of ongoing compliance.
- Unfortunately many payroll processors, including accountants, do not have sufficient knowledge or experience of the pension legislation to follow the correct procedures. This can put their employer or client at risk.
- Not using the payroll software integrated pension assessment tools means that pension contribution data needs to be input manually to the pension provider.
- This can be very time consuming
- Manual input is prone to human error
What’s the solution?
Our business is pensions! We know the legislation inside out. We also provide an outsourced payroll solution for accountants and other payroll professionals.
Automatic enrolment compliance is an integral part of our payroll service. Remove the risk entirely.