Pensions reform – are you ready?

Compulsory pensions contributions are coming, and it's going to have a big impact on all payroll departments. It's going to affect large companies first when it gets rolled out in October 2012, but what do you need to do and what do you need to be aware of?

To remain compliant all companies will need to have a qualifying pension in place by the staging dates which can be found here. The staging dates are staggered depending on the size of your payroll. Don't worry as you will be given your staging date from the Pensions Regulators up to 6 months prior to it starting.

The employees who are eligible for automatic enrolment, are those aged 22 to state pension age whose earnings are above a certain amount (currently £7,475).

The challenge as an employer is getting everyone to contribute - but with an option to opt out. Employers will also have to make minimum contributions starting at 1% and moving up to 3% between 2012 and 2017.

It's quite a task for businesses to get everything in place in time, you will need:

• Qualifying pension plan
• Your staging date from the pensions regulator (depending on size)
• Rules and validations around which of your current employees are eligible

Even those that are non-eligible have the right to opt-in if they wish, and then there's those who are entitled who will be eligible to join.

As an employer you will be expected to keep documentation of all your employees and their eligibility for the compulsory pension's contributions.

It's going to pay to be prepared and communicate with employees, so they know exactly what's happening with their pay packet, when the contributions will start, and how much they'll be expected to put in.

Having a good software provision in place could make the whole process simpler. Here at Access we're looking to allow our users to run a wizard on the appropriate staging date in order to identify which employees fall into which category and to add a specific pension window which will list all employees for Pension purposes so that the records can be easily worked with.

More information on pensions reform can be found on the Pension Regulators website at www.thepensionsregulator.gov.uk

Dawn Jackson
Payroll Product Manager

Posted in Business, Technology | By Dawn Jackson

Article keywords: payroll, pension reforms, pension reforms 2012

Dawn Jackson

I look after the Payroll product, keeping an eye on legislative changes coming up, as well as feedback from customers', gauging what needs to go into the software next and designing how it should work, working closely with the developers and testers. Sharing information with Dealers, end users and the rest of the business.

I started life as a Cobol Programmer, became a self-employed book-keeper/payroll clerk, with a variety of clients. Took AAT qualification. Came to Access working in QA on the Dimensions accounts product, became team lead before moving into the Payroll Product Manager role.