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Barnett Waddingham
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Are you certain of AE compliance?

Published by Rob Thomas on

As some of the largest employers have now reached their three year anniversary, we are finding that some initial assumptions around the capability of the larger employers to deal with auto-enrolment have not been correct.

This is not so much to do with their work around the initial implementation of auto-enrolment – but much more to do with ongoing compliance going forward. This reinforces our own assumptions that auto-enrolment compliance is as much of a payroll and processes issue as it is a pension one - employers need to be certain that the right processes are in place, and crucially, that they are being followed. The point here is particularly challenging when considering changes in payroll teams and the impact that this can have.

How have employers chosen to ensure ongoing compliance?

Many of the larger employers who have already staged have sensibly chosen to select a software system to help with ongoing compliance - recognising that assessment, categorisation and communication each pay period is a great deal of work. This does of course mean that employers need to be certain that their system is suitable. Mark Ellis of Sanctum Software points out in a recent issue of Payroll World that these systems 'vary enormously in capability and performance', raising concerns for employers who have not considered their auto-enrolment compliance since implementation. Are they still compliant? Were they ever wholly compliant?

“Although breaches which result in errors like this may be dealt with more sympathetically by the Regulator than wilful non-compliance, any breach will result in a cost of some type”

Even when the software being used is suitable, the usability for the end user still needs to be considered. Where we see different teams taking on various separate parts of an employer’s ongoing compliance, can we be sure that every process is being picked up? It's easy to see how certain tasks could fall between the cracks and result in a breach for an employer.

Although breaches which result in errors like this may be dealt with more sympathetically by the Regulator than wilful non-compliance, any breach will result in a cost of some type – even if that is time to put things right - recalling the amount of time implementation took, this could be significant.

The key message here is that although employers may feel that their initial implementation went well, it could be sensible to revisit.  An audit to identify any likely breaches would be a sensible approach – a more positive story to tell the Regulator that you have identified and put right any breaches yourself, rather than as a reactive measure following a Regulator inspection.

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About the author

  • Rob Thomas

    Rob has over 30 years’ experience in Financial Services primarily focused on defined contribution schemes and group risk arrangements. Rob is regulated and authorised by the FCA and is responsible for advising clients on the running of their DC pension schemes.

    View Biography

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