Payroll is often seen as hitting a button and remunerating people, but it is far from that simple. In this insight, we look at what payroll support and frequencies workplace pension providers are providing to help employers and advisers.
HR and payroll professionals know there is far more to the job than processing data and making payments when it comes to the company payroll. Payroll professionals can contribute to finance and HR projects but often find themselves too snowed under by the daily grind, therefore any provider who can make the on-going tasks of submitting data and calculating payroll easier, would be very welcomed.
Having a flexible integration with a workplace pension provider that is accurately calculating employer contributions can make a big difference to the daily working life of payroll professionals. Our data shows that 60% of workplace pension provider systems are able to calculate employer contributions. Of those who do, all do this automatically other than Aviva Designer for whom this is a manual process.
However, when it comes to looking at which providers are able to assist with assessing qualifying earnings, a higher 80% of workplace pension provider systems are able to automatically assess whether qualifying earnings are payable in the relevant pay reference period. The only providers who cannot currently assist with this are Hargreaves Lansdown, Mercer Master Trust (Scottish Widows) and Royal London.
When looking at which payroll frequencies the providers can support there are far more mixed responses. As highlighted in the graph below, all providers can support the more common weekly or monthly payroll, however we should not assume that everyone gets paid like this. According to data from the Office of National Statistics, 14% or workers are paid weekly, 2% paid fortnightly and 9% paid four-weekly (the rest is assumed monthly).
Fortnightly payroll is not supported by Aviva My Money, Aviva My Money Master Trust, Legal & General, Legal & General Master Trust and Mercer Master Trust (Aviva).
Lunar (four-weekly) payroll is surprisingly well supported with only Legal & General and Legal & General Master Trust not supporting this frequency.
Legal & General and Legal & General Master Trust are joined by Aegon Master Trust, Aegon Workplace ARC, and Scottish Widows when it comes to not supporting quarterly payroll.
Yearly payroll is the frequency least supported by workplace pension providers with Aegon Master Trust, Aegon Workplace ARC, Legal & General, Legal & General Master Trust, Scottish Widows and True Potential not supporting its use.
Split payroll periods are also fairly well supported by the providers. Our data shows that 75% of provider systems can handle split payments (pro-rating) if a contribution is applied over a split payroll period. The providers who currently cannot support this are Mercer Master Trust (Scottish Widows), Scottish Widows GSIPP, Scottish Widows Master Trust and True Potential.
All workplace pension provider systems can accept multiple payrolls with no restrictions in place, and we are pleased to see that all systems also have the functionality to sort and cleanse employee data. This is an important process which will assist in mitigating risk and errors. Most do this automatically but for Legal & General and Legal & General Master Trust this is still a manual process.
Most providers can also accept data from multiple sources (only True Potential cannot). Multiple PAYEs are supported by all but Standard Life and Standard Life DC Master Trust, and payments from multiple bank accounts are supported by all apart from Royal London and Scottish Widows.
In terms of support and guidance relating to payroll issues, half of workplace pension providers offer support via online, telephone or more traditional hard copy documentation. The remainder of providers offer one or more of those options to advisers, employers, and members. Legal & General are the only provider not to offer any form of payroll support or guidance to advisers.
Overall, the support from workplace pension providers when it comes to payroll frequencies is good, but it pays to check that a provider supports your frequency before considering a scheme with them as there are some surprises in there (unless you want to change payroll provider).
The support and functionality offered to advisers, employer and members by providers is mixed. Fidelity and Royal London offer the most support as they can automatically calculate employer contributions across all payroll frequencies and also provide guidance and support via the widest number of channels.
Legal & General offer the fewest options in terms of frequencies and also have the most restrictive access to support.