UK Pension scheme compliance is easy with these top tips

UK pension scheme compliance

Payroll legislation is constantly changing, and pensions remain a major pain point for payroll managers and bureaux in the UK.

Most payroll systems still tend to leave users with plenty of manual work in terms of reporting pension payments, updating pension scheme details, amending CSV files and notifying employees. The extent of these manual interventions will frequently lead to errors and a lot of wasted time on inefficient processes. But technology that automates these processes has been around for years, improving efficiencies and freeing up time to provide higher value services.

There are several areas of pension processing that payroll professionals must be careful with in terms of compliance. But fear not - we can look out for certain features in payroll technology that can help with those processes and simplify compliance. So what are we dealing with?

Pension scheme auto-enrolment

Employers are required to automatically enrol certain workers into a qualifying pension scheme and can face hefty fines if they don’t comply.

Automatic enrolment (AE) might seem like old news, but many payroll bureaux and accountants are still facing issues with manual assessment and calculations or having to transfer their data to a middleware software and wait for the results to come back.

Even when payroll software incorporates the assessment calculations, too often these are done after the pay run is finalised, meaning that the payroll manager has to return to manually change data after processing the employee’s eligibility status.

Payroll bureaux should be sourcing a cloud-based payroll software that eliminates extra steps and saves time with pension processing:

  • Real time assessment in the pay run: By determining the employee’s eligibility at the time of the pay run, calculations can be done automatically as the pay run is processed - the payroll manager or bureau then knows the exact figures as they’re processing the pay, and not after the fact.
  • Real time data updates: By working in the cloud with the right software, bureaux can also ensure that their employees can opt in/out of their pension schemes, with the platform capturing and updating that data from the pension provider in real time.
  • Automatic re-assessment: Software that automatically re-assesses employee eligibility each pay run will save a lot of time on checks, and always ensure compliance.
  • Automated auto-enrolment notifications: practices can save lots of time by sending AE communications to workers through electronic means, such as email and/or directly into employee apps.

Pension scheme reporting

Having assessed the workers and calculated the pension contributions, how much time do you then spend playing around with manually altering CSV files and then logging into and uploading to pension provider portals? How much time do you spend logging into the pension provider’s website to check whether anyone has opted out? All of this is unnecessary and wasted time.

Automated AE data management has been around for years. The ability for payroll software to put 'opt out' (and 'opt in') data into the pay run automatically is available for the 6 main AE providers (NEST, The People’s Pension, NOW: Pensions, Aviva, Smart Pension and Legal & General) through a SaaS product called PensionSync. Similarly, all of these providers support automated API uploads and error management for at least some of their AE products, which can then be managed directly from within your payroll software.

In the most advanced payroll softwares, you can manage this without even having to click a button - it automatically happens when you finalise your pay run (along with sending the FPS, your payroll data to your cloud accounting product’s ledger, AE notifications and creating your BACs file).

So why are you managing separate processes after you’ve finished your pay run?  Isn’t that time coming directly off of your bottom line?

Pension scheme deductions

Fed up with remembering to log into the NEST portal to trigger payment collection? Using the right payroll software means that not only are your contribution calculations done in the payroll run, your reporting is fully automated (see below), but also that your collections are triggered automatically.

Auto-enrolment contributions will increase in April 2019

Don’t forget, that the AE minimum contribution levels are increasing again on 6 April 2019. How did the process work for you last April?  Did you have to manually increase the percentages for each employer or did your payroll software automatically increase the percentages for those schemes on the minimum levels? To avoid missing the date and having to do any manual adjustments, it’s important to source a cloud payroll software that will update these contributions automatically whenever necessary.

Accountants and bureaux are spending a significant amount of time on manual payroll processes, which are both frustrating and inefficient.  Switching to a payroll software that offers the following features as standard can remove many frustrations and free up time for payroll professionals to focus on tasks which are more valued by their clients:

  • Cloud technology - to allow easy opt in/out for employees, to easily update and maintain employee data, and ensure consistent compliance with changing regulations
  • Automation - for automated assessment and reassessment, eliminating manual calculations and deductions
  • Open API - for easy data transfer to pension providers via integrated platforms like PensionSync

With these 3 key boxes ticked, compliance will be a smoother and much less painful process.

Kate Brown

Marketing Manager at KeyPay

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