Mon, 30 Jan 2012

Ceridian warns employers their systems may fail to comply with auto-enrolment - resulting in fines and prison sentences

HR and payroll provider Ceridian says payroll is key in ensuring compliance with auto-enrolment legislation that could lead to fines and prison sentences for employers.

Pension auto-enrolment for larger employers will start on 1 October 2012. Ceridian says that payroll, HR and pensions administration will need to be integrated to ensure compliance.

Each eligible employee aged between 22 and state pension age must be auto-enrolled into an employer’s qualifying pension scheme when their salary exceeds the annual salary threshold of £8,105.

David Woodward, Ceridian chief product and innovation officer said payroll was central to this process.

“The point at which auto-enrolment will be triggered is when a qualifying employee crosses the pay threshold during a payroll calculation process.

“To reduce the risk of non-compliance with the new legislation, the core functionality to auto-enrol an eligible employee must be integrated within the payroll system at the point of payroll calculation.

“The payroll system will also need to support auto enrolment by, for example, identifying eligible employees, handling opt-out/opt-in requests and refunding contributions when due.”

The Department for Work and Pensions estimates between five and eight million new savers will contribute to a workplace pension following auto-enrolment.

Research by the Pensions Regulator suggests that 46% of employers will leave it to the last minute before considering complying with the reform.

“The Pensions Regulator has warned employers to be under no illusions that compliance will take time and they will need to adapt ‘their payroll, HR, pensions and IT systems’ so employers need to act now,” said Woodward.

See also:

• Third of employees see pensions as top benefit
• CIPD survey uncovers apathy towards auto-enrolment
• Option to auto-enrol ahead of staging date introduced