Correctly categorising your workforce and identifying who is eligible to join a pension scheme under auto-enrolment rules can be a headache for employers, and on-going reporting under TPR rules can be the headache for employers that just keeps giving.
Thankfully most workplace pension providers are able to help and support employers through the process.
Since the Pensions Act of 2008 came into force, many employers have been struggling to correctly categorise their employees. The challenge is especially daunting for those with a large zero-hours contract-based workforce or seasonal workers. When you add reporting duties on top of this challenge, you can see why some employers have struggled to meet their auto-enrolment staging dates or have found themselves faced with fines due to inadequacies found by the regulator.
Auto-enrolment introduced a statutory duty on employers to assess their workers and enrol those who met the criteria into a qualifying workplace pension scheme. It is taken very seriously by The Pensions Regulator (TPR) which often issues escalating penalty notices against employers that it has found to have failed in their auto-enrolment duties with fines building on a daily rate from £50 to £10,000 per day.
Our data shows that the systems of an encouraging 85% of workplace pension providers are able to help the employer define who is a worker as defined by employer duty rules under auto-enrolment.
Other than NEST, all workplace pension providers have a suitable system/procedure in place in order to identify who is eligible to join a pension under auto-enrolment rules. All of these providers are able to identify eligible job holders, non-eligible job holders, and entitled workers as well as being able to take this data electronically from an employers HR and payroll systems to support the process and make it considerably easier (see our separate insight on Payroll integrations for further analysis)
Based on our analysis, NEST is the only workplace pension provider whose auto-enrolment solution does not have a rules engine capable of automatically initiating tasks or establishing eligibility based on data, events and dates.
Legal & General and NEST are also the only providers whose system cannot make an assessment of a scheme’s eligibility criteria against TPR rules. Our data shows that the other providers are able to assess both automatic enrolment criteria and qualifying criteria as defined by TPR.
Most workplace pension providers also all offer reminders to the employers for the key stage of this process. An important tool in helping ensure that all duties and reporting are carried out when required.
When employers log in to the Aegon hub for example, they will be presented with an events calendar, showing key stages at the process and what needs to be done.
For Royal London, their auto-enrolment service includes an Employer Dashboard which will allow employers to get an instant health check on their scheme status and see whether they are on track; and Standard Life are able to issue reminders up to nine months prior to triennial enrolment periods and at all other key stages until completed. This process is similar at True Potential, Scottish Widows, and Aviva.
When it comes to data validation, NEST can offer a similar approach to the more traditional providers. All workplace pension provider propositions are able to validate the employer’s data and send error reports and notifications enabling and requiring corrections to be made.
Scheme registration is another area of auto-enrolment that can be a headache for employers. Our data shows that 62% of workplace pension provider systems are able to assist with scheme registration. For just over half (52%) of systems this includes periodic re-registration and re-certification of qualifying schemes according to the schedule required by TPR.
The majority (85%) of workplace provider systems are also able to assist with scheme certification. However, just under a quarter (24%) do this automatically with no human intervention necessary.
With HR inevitably involved with auto-enrolment, you would have thought ongoing integration and consolidation of data from HR systems would be something that workplace pension providers were keen to showcase. Our data shows that only 48% of providers are able to consolidate separate HR and payroll files for the appropriate pay period.
However, overall, most workplace pension providers are able to help support employers through the auto-enrolment process in a wide range of ways including categorisation, registration and reporting.
A small number of providers are offering less in this area due to their systems not being able to make assessments of eligibility criteria under TPR rules, a key area where many employers will look for assistance.