Auto Enrolment software has got confusing.
It isn’t surprising that we have come to this. When you combine third party software solutions with pension software there was almost inevitably going to be issues.
This confusion has been caused by the fact that in general, payroll software and pension software traditionally only had to communicate with each other on a fairly Neanderthal basis. Not so now; Auto Enrolment demands a far higher level of exchange and, historically, few pension companies employ payroll experts and vice versa. The outcome of this means we now have both types of provider building their own software solutions, with varying levels of success and most are still a work in progress!
With that thought in mind, we’ll try and answer some of the common questions around this subject:
Q - Why is additional software required?
A – To check at each payroll run for workers who have to be enrolled. In addition there are extra tasks that have to be completed, including calculating contributions, preparing pension provider files and statutory communications and record keeping.
Q- Who provides this software?
A – Almost everybody! Some company pension scheme providers, most payroll providers in some versions, and a number of third party software providers, some of whom also provide complex HR systems for larger companies are now providing this software. It’s important to note that many one or two man companies utilise the HMRC payroll system, which as of October 2015 does not offer an automatic enrolment solution.
Q- Which is best?
A- Well, it depends on what the employer / payroll bureau is trying to achieve. If the assessment is being completed by a third party pension provider, or software program, the gross salaries have to be calculated and exported to the third party who then processes the assessment and contributions and, in some cases, prepares communications. A file is then returned to the payroll provider who can then import the contribution data and run the payroll.
Typically, payroll software is capable of calculating the gross salaries and performing the necessary tasks in one action, without exporting and importing files to other systems. Obviously despite at least one large payroll company claiming their software does it all, a qualifying company pension scheme still has to do the selection and implementation. Not all payroll systems offer the full range of options the legislation allows but most offer a workable, if restricted, solution.
Pension providers tend to be better at communicating pension matters to workers prior to enrolment than payroll providers. However, most small companies with variable pay calculations prefer a system that is integrated into the payroll to save the time and expense of exporting and importing data files.
Third party software systems typically offer portals that are capable of expansion to incorporate HR features such as flexible benefits packages. These systems offer a wide range of flexibility within the rules of Automatic Enrolment; however, require export and import of data files prior to the payroll run. At a basic level only they provide what can usually be provided by payroll or pension provider software. Employers and bureaus who currently calculate and run their payroll in one action will have to separate the actions and export and import files to the software provider before finally running the payroll.
Q - Which type of Automatic Enrolment systems do AE Ready Ltd recommend?
A – AE Ready Ltd have developed a cost effective solution to Automatic Enrolment which, in standard form, utilises the software packages provided by the payroll providers. This approach minimises time and expense of processing Automatic Enrolment files and also negates the need to import and export data before the payroll can be run. AE Ready provides a comprehensive employer education and report, alongside setting up the master trust scheme of the employer’s choice. We also record all relevant details necessary to implement the payroll software.