Why payroll will be pivotal to successful auto-enrolment

 

In the final instalment of our series on payroll issues, Moore and Smalley’s payroll manager Margaret Merrifield explains how the quality of a business’ payroll service will determine its success in implementing auto-enrolment.

 

The introduction of auto-enrolment for pensions is getting closer for more and more businesses.

 

Along with Real Time Information, auto-enrolment presents one of the biggest challenges that payroll teams have faced for many years.

 

Its successful implementation by companies of all sizes will depend on multiple business services working together, but undoubtedly being led by the payroll function.

 

For many, it will more than likely require investment in payroll processes and systems, whether in-house or outsourced, to ensure they are ready for their auto-enrolment ‘staging date’.

 

The growing power of the payroll function

 

Traditionally, payroll has been viewed by businesses as merely the mechanics of paying people. But payroll systems now hold a vast amount of information that’s vital in enabling employers to comply with their auto-enrolment obligations.

 

Payroll systems are able to examine the age and earnings of a workforce and determine the number of workers to be automatically enrolled. In addition, payroll can establish the date that workers become ‘eligible’, calculate pension contributions and manage pension contribution refunds for workers who’ve chosen to opt out.

 

As a result of this growing functionality, we’re now seeing payroll teams take the lead on these issues, liaising closely with other strands of the business, such as HR, IT and finance to ensure compliance.

 

Aligning payroll and HR systems for auto enrolment

 

This process is far easier if employers align their payroll and HR systems with what is being offered by their pension provider.

 

Employers will need to think carefully about how they link these systems so that employers can determine factors including eligibility, opt-out and re-enrolment.

 

Dealing with the dual issues of auto-enrolment and RTI is placing an additional burden on many businesses, so it’s vital that payroll teams are robust enough to manage these changes.

 

Outsourced payroll providers are well placed to help businesses ensure a smooth transition and guarantee their compliance.

 

For more information contact Margaret Merrifield on 01524 388719 or margaret.merrifield@mooreandsmalley.co.uk