Late last summer, we sat in a crowded room above a bar in Southwark, payroll people and pensions people and we talked. The payroll people were frustrated, they had no voice in the pension reforms and were expected to design software for regulations that made no sense to them. The pensions people, myself, Stella Eastwood of Centrica and Alan Smith of First Actuarial listened.
A few days later we got a message from a friend in Government. Steve Webb was prepared to meet a delegation of payroll people but there was to be no whingeing , they should bring no more than five demands to the table and every problem should have a solution. In short, the Pension Minister thought payroll had been asleep at the wheel, they had one shot at getting change.
Using the resources of Payroll World a summary and agenda for action was drawn up by payrolls thought leaders Alex Rowson, Norman Green and Simon Parsons, by a payroll practitioner Andy Gould of Centrica with pensions input from First Actuarial. Karen Thompson of the Chartered Institute of Payroll Practitioners (CIPP) made the arrangements to meet the Minister. We had listened and this is how we presented ourselves
The purpose of this brief is to inform the Minister of the Payroll and Pensions Industry Group’s (PPIG) five areas of concern about automatic enrolment (AE) and to promote the Group’s recommended solutions. In summary we have 5 concerns and 5 solutions
Here were our solutions
- For AE to run smoothly, we urgently need to align the pensions pay period and the pay points used for the operation of Tax and NICs.
- Allow employers the option to commence contributions from the next pay period and align the start of communication duties with the pay date, when pay facts are known
- To remove the requirement for pro-ration and have employees pay the full contribution when age and triggers are passed, at the point of payment.
The auto-enrolment reassessment date should be maintained for the duration of an employee’s continuous employment.
Regulations should consider AE and contribution payment as due from the point of payment, in alignment with tax and NICs, and allow communication duties to commence from this point.
Reading the DWP’s consultation on Technical Changes to Automatic Enrolment, it’s clear the Minister listened , edited and has responded incorporating the majority of our group’s requests.
The result will be simpler payroll processes, less risk , less cost and less of a burden on the Regulator.
Companies will be able to spend more time and resource concentrating on improving the member outcomes.
Staging auto-enrolment is designed to be a smooth-ride and to happen with business as usual. The consultation is a practical step in the right direction.
Only one of our solutions has not been taken up, I’m grateful to Andy Gould for bringing this to my attention and for an Aon Hewitt press release for articulating the issue.
“As it stands, an inter-group transfer of employment requires an individual employee to be automatically enrolled under their new position – even if they have recently opted-out of the very same scheme.
Clearly this needs to change. We would like to see some easement within the auto-enrolmentprocess, so that associated employers within a group are able to treat group employees more holistically.”
A diminishing issue for new stagers with less complex corporate structures, but an ongoing issue for our larger companies (who have already borne the brunt of the cost of developing AE).
Hats off to the journalists, thought leaders , practitioners and trade representatives who worked together for good. In a couple of weeks they created a framework for change.
They have proved an inspiration to me, showing that by working positively for the common good, things can be changed for the better.
It’s people who make the difference, payroll people, pensions people and people in Government who are clear about what they want, open to ideas and decisive in their actions. Great credit once again to Steve Webb.
- Lord make AE simple – but not yet! (henrytapper.com)
- Beeb forces closure of offshore payroll loophole (henrytapper.com)
- Primavera for the pension plapen (henrytapper.com)
- Primavera for the pension playpen (henrytapper.com)
- People get ready! (henrytapper.com)
- Better-buying makes auto-enrolment work (henrytapper.com)
- Honest! Open Government in operation! (henrytapper.com)
- Auto-pension countdown is now ticking (theraconteur.co.uk)
- Government consults on auto-enrolment (employeebenefitsblog.wordpress.com)
- The Public Eye: Sacramento County settles with IRS on tax money stolen by payroll firm (sacbee.com)