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Pensions auto-enrolment: What employers need to know about payroll

The law on workplace pensions has changed. Every employer with at least one member of staff will have new pensions duties.  This means they must automatically enrol eligible staff into a workplace pension scheme and make contributions towards it. 

It is called automatic enrolment because it is automatic for your staff – they don't have to do anything to be enrolled into your pension scheme, but it is not automatic for you. You need to take steps to make sure you comply with the law.

How can payroll make automatic enrolment easier?

Consider using payroll software if you don’t already. Payroll software can simplify the process of assessing your staff and providing information about them to your pension provider. If you don’t already use payroll software, you may want to consider doing so.

Make sure any payroll software fully supports automatic enrolment.  Check that your software is designed to carry out all the automatic enrolment tasks to help you comply with your ongoing duties. If it doesn't, you should consider updating your software.

Ask your payroll or pension provider if they have a checklist of the information they require and the tasks to carry out.

Make sure your payroll system can generate a report or file in the correct format for your pension scheme provider's system. If someone else manages your payroll, ask them to confirm this. We recommend doing this around six months before your staging date. If possible, generate a test file from your payroll to send to your pension provider to ensure it will work.

Implementing automatic enrolment and carrying out on-going duties will be easier if payroll systems can carry out the following tasks:

  • Hold information required for automatic enrolment, including staff name, address, date of birth and earnings, so employers pay the right amount of pension contributions for the right person at the right time
  • Generate the correct worker contribution and data in the format that pension providers require
  • Assess staff to see who needs to be automatically enrolled in each pay cycle
  • Calculate contributions for both the employer and staff, and then deduct the staff contributions from their pay
  • If possible, produce worker communications like letters to inform workers of their rights.

What do I need to do?

It is essential that you ensure your staff records – including their dates of birth, salaries, National Insurance numbers and contact details – are correct and up to date.

You'll need to keep track of your staff details, as well as the amounts paid into the scheme each pay period, once you've automatically enrolled them.

What if someone else does my payroll for me?

If a payroll service provider (also known as a payroll bureau), an accountant or bookkeeper manages your payroll for you, they may also be able to carry out some automatic enrolment tasks on your behalf – but you’ll need to check this with them.

If your current payroll software or service provider can’t support you in this way, other providers or software may be able to.

You may want to consider updating your software, speaking to companies that offer additional payroll services or investigating other software and tools available to complement your software.

Your pension scheme provider may also be able to help you. For example, some pension providers offer assessment, can handle opt outs and send letters to staff.

Not sure when the legislation will apply to you? Find out your staging date at the Pensions Regulator website www.tpr.gov.uk/staging-date 

Forum members can download a guide to pensions auto-enrolment and get a free consultation and report tailored to their business. Further help and advice is also on hand through our helpline on 0845 130 1722

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