Auto enrolment update from Chase de Vere Jan 2014
As employers move towards their auto-enrolment staging date, they begin to realise that complying with the new legislation can be a real challenge to their existing internal business systems. This is particularly the case for those businesses working on tight payroll timescales.
Re-assessing the workforce every time you pay them, producing statutory communications, calculating contributions, auto-enrolling and enrolling employees and processing opt-in and opt-outs are unlikely to be practical tasks to do manually. As a result most employers accept that technology, usually known as middleware, will have to be the solution to managing these new duties efficiently.
The challenge for employers is understanding the bewildering range of solutions out there and then which is the right one for them. The array of potential providers includes:
- Payroll technology providers
- Pension providers
- ‘Stand alone’ technology solutions
- Outsourced auto-enrolment admin providers
When auto-enrolment was formulated by the government, the natural expectation was that the payroll industry would design and deliver the technology to help employers. In typical fashion, the payroll industry was already using its development resources helping clients comply with HMRC’s Real Time Information (RTI). As a result, although it is now catching up quickly, a wide range of other solutions were developed to fill the void.
So how does an employer select the right solution?
The short answer if that it is difficult for any employer to have the time, expertise or, to be frank, the inclination to thoroughly understand this new market.
At Chase de Vere, our technical teams have undertaken huge amounts of research to assess the best options for our clients. Unfortunately, because of the complexities involved, our auto-enrolment specialists regularly meet with new employers who have committed to contracts without understanding the alternatives.
So is there a rule of thumb which can point me in the right direction?
The main considerations to ensure you make the right decisions are: what are you trying to achieve, when is your staging date, what can your existing suppliers provide and what is your budget.
If we consider the main providers:
Payroll Providers – If your payroll provider has a solution that works and is within your budget, this will probably be the most straightforward option. The key is to make sure that any additional auto-enrolment module will work within your timescales and deliver the full range of functionality you need.
Pension Providers – Most of the major pension providers will offer a middleware solution as part of their overall package. This can be really useful, as a quick and cost effective solution, if your payroll provider is unable to meet your needs or their costs are too expensive. However, you need to beware. Service levels can vary significantly between pension providers and some will charge additional fees to use their technology.
‘Stand alone’ Providers - There are many ‘stand alone’ auto-enrolment solutions in the market, usually offered by advisory firms or flexible benefit providers. Our experience is that these tend to be relatively expensive, so unless you plan to use additional functionality, such as running a flexible benefits scheme, you may end up with an expensive over-engineered solution.
Outsourced auto-enrolment admin providers - There are a number of firms which will, for a price, take away the burden of auto-enrolment compliance from you. Outsourcing can be a viable option for some employers. However, you will still need to provide regular feeds of payroll data to the outsourcing firm and, if you have the right middleware technology yourself, much of the work you would be paying for could be reasonably automated in your company once the set up work is complete.
What is clear is that employers need to ensure they have the most appropriate middleware solution to allow them to comply with their new duties. They should understand all of the available options before committing to a decision and for many employers the best way to achieve this will be to take specialist professional advice.