This is national payroll week so I’m blogging an article I wrote earlier in the summer for Reward Strategy Magazine. Since the end of the auto-enrolment staging period, I have had less day to day interaction with payroll people, but I continue to consider them the unacknowledged hero of workplace pensions!
Late in 2012, I sat in a crowded room above a bar in Southwark. Payroll World (the predecessor of Reward Strategy) were hosting a roundtable of payroll 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 then 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. He said they had one shot at getting change.
Using the resources of Payroll World, a summary and agenda for action was drawn up by payroll thought leaders Alex Rowson Norman Green and Simon Parsons. They got input from payroll practitioner Andy Gould of Centrica and technical assistance from the pension specialists.
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
These 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.
- To 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. He edited our wordings and responded incorporating the body of our group’s requests.
The result was simpler payroll processes, less risk, less cost and less of a burden on the Pensions Regulator.
Companies have been able to spend more time and resource concentrating on improving the member outcomes.
Staging auto-enrolment was designed to be a smooth-ride and become business as usual. The PPIG recommended practical steps that took auto-enrolment in the right direction.
Hats off to the journalists, thought leaders, practitioners and trade representatives who worked together for good. In a couple of weeks, we created a framework for change.
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 was due to Steve Webb.
Could this have happened today, maybe. But I think that what happened seven years ago stands out in my 35 year career in pensions. From a personal point of view, I felt empowered by payroll and in the years that have followed, I hope that I’ve been able to repay the favour.
I sit down regularly with Helen Hargreaves as the CIPP help resolve the problems surrounding net pay and pensions. These days we have allies not just in Steve Webb but in Baroness Altmann who is now Chair of PensionSync. I hope that payroll won’t ever again be left behind as it was at the outset of auto-enrolment.
And I hope that the reason for my optimism is grounded in that morning in a bar in Southwark, when payroll made friends and influenced Government.