Here Alan Jones, managing director of Cascade HR, contributes a guest blog post to share his thoughts about the incredibly hot topic of auto-enrolment…

 

 

There’s no denying that auto-enrolment is currently a huge topic for HR and payroll teams across the country; the media is overwhelmed with news of updates, industry opinion and expert guidance. Admittedly some companies need to pay attention sooner than others as the phased implementation of auto-enrolment will affect them with more immediacy. However we should all begin thinking about what effects the new pension regulations will have on us, what will have to change – culturally or operationally – within our organisations, and how we are going to effectively manage any adjustments…

 

 

Firstly let’s consider the facts. From 1 October, employers with 120,000 or more staff must enrol all eligible employees into a qualifying pension scheme, a process which will continue until 2014 when organisations with fewer than 50 employees must also auto-enrol. If you have less than 50 employees then visit legislation.gov.uk to find out when you will be affected. An eligible worker is an employee aged between 22 and state pension age, and earning above the income tax personable allowance (£7,475 in 2011/12). Having chosen the qualifying scheme they wish to adopt, employers must either make a minimum contribution (1% to begin with, rising to 3% by 1 October 2018) towards a defined contribution scheme or NEST (the National Employment Savings Trust). Membership to a defined benefit scheme can also be offered as an alternative (see the Pensions Advisory Service for more details).

 

 

Failure to comply could result in The Pensions Regulator fining employers up to £10,000 a day, so it’s clear to see that this newly arising duty is serious business.

 

 

So is this is a positive move for the UK? Personally, I feel it has to be a good idea as organisations and employees alike are now faced with the fact that they have a joint responsibility to make provisions for staff retirement. Two if not three workforce generations have missed the opportunity to save for the future, but because we’re generally living longer, the new regulations should help us sustain a better quality of life when no longer taking a salary.

 

 

Small business organisations have understandably lobbied for delayed implementation of auto-enrolment within smaller companies, but it is perhaps a shame in some respects that the dates have been pushed back because this means potentially a couple more years of missed saving.

 

 

Obviously there will be cost implications for employers and employees alike which will be difficult for many to bear given the rising costs of food and fuel, the number of pay freezes across industries, and a relatively high inflation rate in comparison to that of recent times. Because of this many employees may choose to opt out of the scheme, which, whilst not prohibited, is arguably a shame as the employer contribution is then lost too.

 

 

Whether or not we personally think auto-enrolment is a good idea, we cannot ignore the fact that the duty is going to be upon us sooner than we perhaps realise. It is therefore important to consider how this will affect day-to-day workloads in HR and payroll teams. Naturally this procedural-led initiative has the potential to create additional administrative pressures for our HR and payroll professionals because documentation must be produced and evidence proven, whether employees opt in or out. When it comes to actually making contributions, there will be work to do there too as payments must be made to the third party pensions provider.

 

 

So, renowned for our ability to introduce technology that removes the headache of time-consuming HR and payroll activities, we are currently working on an auto-enrolment solution that will sit across Cascade’s fully-integrated HR and payroll software system. This means clients won’t have to struggle to manage the pension regulation changes alone. Instead we will help you understand the auto-enrolment process and the nature of data that you will need to capture to assess your workforce eligibility, manage the opt-in/opt-out process and make contributions appropriately.  A programme of training and guidance notes will also be available when our new module is ready.

 

 

Of course new auto-enrolment companies and products are cropping up all the time, but why make your internal processes and systems more complex by investing in an additional third-party platform? The more technologies you integrate, the more interfaces you have to operate, the more information you have to key in and manage, and the greater the likelihood for error. Plus it goes without saying that with Cascade, you’re working with a well-established team and a resource that you can trust.

 

 

HR and payroll has come a long way over the past 10 years, and it is great that professionals are now working together more than ever before. However it is clear to see that changes within our industry will keep happening apace over the next 10 years. With Cascade though, you can rest assured that there will always be a module or functionality there to help you evolve. We’re not afraid of change, in fact we encourage it.