Mon, 13 Feb 2012

‘The perfect payroll storm’ - how PwC views auto-enrolment and RTI

PricewaterhouseCoopers (PwC) is warning that the combination of auto-enrolment and Real Time Information (RTI) implementation will produce a perfect storm for payroll departments.

John Harding, tax director at PwC, told Payroll World that the profession will be facing the conditions between October 2012 and summer 2013.

Preparation for RTI, and the data cleansing necessary for compliance, is a major challenge.

But auto-enrolment could be the even bigger issue, he said, reporting concerns from PwC clients. “What role will payroll play? Where is the data going to be held? There are issues around the assessment piece that payroll will have to do.”

He added: “More and more I’m using the term ‘perfect payroll storm’ between October 2012 and summer 2013.”

Adverse conditions

On auto-enrolment, payroll teams will have to ensure that people are entered into new pension deduction systems at the correct point. This could be as they join, as they reach the age of 22 (the starting age) or as they reach the earnings threshold, which could be at the point of a mid-year pay rise or a bonus.

Additional care has to be taken where one of these staging posts comes just after a pay-run or cut-off date.

Payroll staff will also have to inform people of their rights to opt out, but must take care not to give pensions advice for which they are not authorised.

Auto-enrolment becomes compulsory for medium to larger firms from October 2012.

But Harding said that a bonus of the changes is that the profile and status of payroll will move up the organisation, especially in light of the importance of the penalty regime policing auto-enrolment.

See also:

• RTI User Group minutes published
• Payroll World and Sage undertaking definitive RTI and auto-enrolment survey
• KPMG: Businesses leaving planning for RTI ‘dangerously late’