Smaller employers have fewer resources to deal effectively with auto enrolment duties, a new report released by the Public Accounts Committee (PAC) has found.
1.8 million businesses are due to reach their auto-enrolment staging date between 2016 and 2018, but the report has expressed concerns that limited budgets and available resources will make auto enrolment compliance difficult.
Among its recommendations, PAC advised the implementation of a real-time information (RTI) feed by 2016 to help smaller employers with auto enrolment implementation. Currently, the Pensions Regulator (TPR) has limited access to real-time information, a system whereby employers and pension providers report tax and tax deductions at the time payments are made, rather than at the end of the financial year.
PAC also advised closer working between the Department for Work and Pensions (DWP) and small employers to ascertain the experience of smaller employers, whilst identifying new and innovative ways to simplify the process, such as online tools which allow data exports.
According to David Parfett, Senior Corporate Pension Consultant at Aon Employee Benefits, having payroll software which carries out worker assessments each pay period whilst automatically calculating and deducting the necessary contributions, will help streamline the processing.
"Some payroll systems now have tools in place to allow straight-through processing of this assessment / contribution data to the pension provider, but sadly many still require manual uploading of csv files to the pension provider," he advised.
Commenting on the report, Meg Hillier, chair of PAC said: "The Department for Work and Pensions must watch and learn from the experience of small employers and ensure easy-to-use tools are in place to support them. We will be following the department's progress closely over the next 12 months and expect it to respond effectively to the recommendations detailed in our report as the roll-out proceeds."
Parfett added: "The other disconnect is that payroll providers generally do not provide advice to employers on the very issues that employers are struggling with, such as establishing a suitable pension scheme, selecting a default fund, understanding which workers need to be considered, assessing existing pension schemes and understanding the differences between using Qualifying Earnings and basic/total pay.
Therefore, smaller employers have to work through a complex set of legislation, without having the benefit of HR or Pension departments. The challenge for the pension advisory community is to develop tools to deliver this at a price that benefits the budgets of the smaller employer. To meet this demand, Aon has developed a product called Littleblue 2go www.getlittleblue.com."
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