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Why you need to review your auto-enrolment implementation

By Mark Futcher, partner and head of auto-enrolment, Barnett Waddingham

Payroll managers might not have thought much about auto-enrolment since the staging date and declaration of compliance took place – although an increasing number of fines suggests that it’s vital to consider whether the correct processes are being followed.

We have seen an increase in action taken by the body responsible for policing auto-enrolment – The Pensions Regulator (TPR) – with 166 fixed penalty notices issued in the last quarter of 2014, and 198 issued in the first quarter of 2015. TPR has now also issued its first escalating fines.

A simple alarm system for TPR is the completion of a declaration of compliance. A well-known retailer failed to complete this, and a subsequent audit carried out by TPR identified a number of failings. This resulted in formal action – which included the employer making contributions which had been missed in respect of both the employer and employee.

A key reason behind these failings was a change in key personnel involved with the project. It’s easy to see how changes to the team working on payroll could lead to some mistakes, but this unexpected, significant cost could have been avoided had the employer conducted their own audit prior to TPR’s involvement.


Auditing your compliance with auto-enrolment is, of course, likely to be a significant undertaking – think back to the actual process of implementing auto-enrolment and how much work (and therefore cost) was involved there. You also need to consider whether it would be appropriate to bring in an external auditor to ensure nothing is being missed.

Some of the key areas to look at in an audit are issues that could affect some workers and not others. These include the amount that is deducted, when people are assessed for auto-enrolment and perhaps even whether postponement is being used incorrectly (for example, if postponement applies and the notice is not issued within six weeks, the employer will have breached the regulations).

The fact that issues with auto-enrolment may not be apparent for every worker means that a spot check might not be an appropriate way to carry out an audit. Although carrying out spot checks involves less work, there is a significant risk that you could miss breaches.

A more appropriate way forward could be to use a specialist AE auditor focusing on all aspects within payroll and taking data into account from each worker. This approach would then be a useful base from which to consider how to put right any issues.

The cost of mistakes made since staging could be financially damaging. Reviewing your scheme allows you to feel safe in the knowledge that the auto-enrolment provision for your business is compliant and problem-free.

Posted on 23rd June 2015 by Jerome Smail



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