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Accountants – Would an auto enrolment pre-assessment tool be useful?
Auto Enrolment is now in full swing and starting to affect small and micro employers. Many of these employers do not understand auto enrolment and do not want any ongoing involvement with the process. A key concern for small and micro employers is how much auto enrolment will actually cost their business.
With auto enrolment, employers are faced with additional ongoing costs, including the employer contributions each pay period. What is the easiest and most accurate way for an employer, or a bureau on their behalf, to calculate these costs?
BrightPay have developed a pre-assessment tool, which enables users to automatically prepare a pre-assessment report. This report is useful to send to clients 6 months in advance of their staging date, giving the employer a preview of what auto enrolment will look like when they reach their staging date.
The pre-assessment tool uses employee details from the current pay period to provide an estimate of what auto enrolment might look like at the time of staging. The report will include details of each employee’s auto enrolment worker category, along with their pensionable pay, qualifying earnings, employee contributions and employer contributions. Watch BrightPay’s Pre-Assessment video.
PDF Example: Pre-assessment Report
The amounts are subject to change, depending on non-eligible or entitled workers choosing to join the scheme and fluctuations in employee pay.
The report can be exported to PDF and also includes some general information about employee assessment, including definitions of worker categories, qualifying earnings and minimum contribution rates.
This is an ideal document to send to clients in advance of their staging date, giving them an idea of how much auto enrolment will cost them at each pay period thus allowing them to plan accordingly. For example, the report may show that the employer has no eligible jobholders, and so is not required to set up a pension scheme.
BrightPay will also allow you to create a post-assessment report. After staging, the assessment report will give you a snapshot of what auto enrolment looked like on the staging date, highlighting the assessment date, the employee worker categories and postponed employees.
PDF Example: Post-assessment Report
Video: You can see how BrightPay’s pre-assessment tool works here.
BrightPay Payroll and Auto Enrolment Software
The Pensions Regulator introduces Auto Enrolment Toolkit for Basic PAYE Tools users
The Pensions Regulator estimates that 1.8 million small and micro employers will reach their staging date within the next two years. These employers include an estimated 200,000 HMRC Basic PAYE Tools (BPT) users.
To date, BPT users have not had access to software functionality that can help them carry out their auto enrolment duties. Assessing the workforce and calculating contributions manually could lead to errors, burden and non-compliance.
Although free and low cost software is available to support auto enrolment, a high volume of BPT users are unlikely to switch to commercial software as many are concerned that they will be persuaded to buy additional products and services. Whilst there is no legal obligation to have software in place, it is evident that it improves employer compliance.
Auto Enrolment Toolkit
The Pensions Regulator are working to release an auto enrolment toolkit by November 2015. As it is a government provided tool, some BPT users may assume that it is the most appropriate solution to use.
However, even though the tool will help BPT users with auto enrolment, it will not provide auto enrolment functionality. The toolkit is intended to be in the format of a downloadable excel spreadsheet that will:
● indicate who should be automatically enrolled into a pension scheme
● provide an employer/employee contribution value (where applicable)
Although the tool will assess the workforce and calculate contributions, the scope of the tool will be very limited. What it will not do:
● It will not support multiple pay frequencies.
● It will not support variable contribution levels.
● It will use a tax-based pay reference period only.
● It will assume that the legal minimum entitlement is being used.
● It will calculate contributions based on banded qualifying earnings only.
● It will only support up to 15 workers.
● It will only support entitled workers if they are placed in an auto enrolment scheme on the same basis as other employees.
● It will not have postponement functionality.
● It will not have the ability to support re-enrolment.
You can find a full breakdown of the limitations here.
The auto enrolment toolkit will reduce the risk of both initial and ongoing non-compliance among BPT users. However, will it actually make the auto enrolment process easier?
Integrated Software
The Pensions Regulator encourages employers to use an integrated payroll and auto enrolment solution that will simplify and streamline auto enrolment. An integrated system, such as BrightPay, will allow you to save time and reduce workload.
There is now a 50% discount for new customers who purchase a BrightPay 2015/16 standard licence when you switch from HMRC Basic PAYE Tools. A standard licence (normally £89 + VAT per tax year) includes unlimited employees, auto enrolment functionality and free support. Now you can get this for just £44.50 + VAT per tax year.
BrightPay also has a free licence for micro employers with up to three employees, including support and auto enrolment functionality.
You can now book a demo to see how BrightPay handles auto enrolment. The one-on-one online demo is done through an online screen sharing site and lasts approx. 20 minutes. Alternatively, you can download a 60 day free trial to try it out for yourself.
* Offer applies to new customers who switch to BrightPay from HMRC Basic tools or another payroll software provider for the first year subscription only. This offer applies to BrightPay 2015/16 employer licences only and cannot be used in conjunction with any other offer.
Written by Rachel Hynes for BrightPay Payroll and Auto Enrolment Software
BrightPay: Now Supporting 14 Pension Providers
The introduction of automatic enrolment means that employers across the UK must enrol eligible jobholders into a workplace pension scheme.
Employers must choose a pension scheme that meets the qualifying criteria for auto enrolment. The Pensions Regulator recommends that you choose your pension provider 6 months before your staging date to allow enough time to make the right choice for you and your staff.
There are a number of things to consider when choosing a pension provider, one of the most important being compatibility with your payroll software. Each pension provider requires information in various formats and so it is essential that your payroll software supports your chosen pension provider.
Speak to your payroll provider and ask them if your chosen pension scheme will work with your software. If it doesn’t, you should consider updating your software.
BrightPay currently supports 14 different pension providers, with more constantly being added. If your chosen pension provider is not on the list below, feel free to let us know and we can look into making it available.
The pension provider support in BrightPay allows you to create customised enrolment and contribution files for each of the pension providers, where applicable. APIs with a number of the above pension providers are also in working progress. This means that there will be a direct link between BrightPay and the pension scheme provider.
Although BrightPay supports these pension providers, the software does not choose the pension scheme provider for you. It is the employer’s responsibility to choose a relevant pension provider for their workforce.
To assist with choosing a pension scheme, The Pensions Regulator has recently released a guide to selecting a pension scheme for automatic enrolment for employers. If you need extra guidance, you can also contact an Independent Financial Adviser, but ultimately, the choice of scheme is the responsibility of the employer.
Written by Rachel Hynes for BrightPay Payroll and Auto Enrolment Software
Business Accountant 