Auto-enrolment presents a significant challenge for employers of all sizes.
Between 2012 and 2018, all employers will be compelled to comply with new legislation, providing a workplace pension and making contributions for qualifying workers. These new duties will carry an administrative and a financial burden, so planning is key to ensuring the impact on your organisation is minimised.
The key focuses for organisations are:
Financial - quantifying the cost of making contributions into employee pensions, the cost of running the scheme and any related costs such as upgrades to payroll systems.
Pension - all existing schemes must be reviewed for suitability and certified with the Pensions Regulator. All new schemes must be compatible with Auto-enrolment.
I.T. - employers will need to assess their workforce during each pay reference period to establish who must be enrolled and what contributions must be made. Thorough records must be kept for all employees. You may need to upgrade your payroll software or source a third-party I.T. solution, often known as a 'hub' or 'middleware'.
Communications - all employees will need to be told about Auto-enrolment. Some will need to be told that they are being automatically enrolled into a pension and others must be told of their rights to join.
These factors will take time to address as you will need to make internal changes to deal with the extra administration and make key financial decisions. By addressing these key issues as early as possible, your organisation has a better chance of reducing or mitigating the costs of Auto-enrolment, which may otherwise prove costly.