Payroll should be responsible for pensions auto-enrolment

More than a third (39%) of respondents believe payroll departments should be primarily responsible for pensions auto-enrolment, according to research by Iris Software Group.

Its research, which surveyed 100 small and medium-sized enterprises (SMEs), found that 13% of respondents felt the legislative changes should be the responsibility of payroll and HR, while 3% said that payroll, HR and finance should all be involved.

Almost one-quarter (23%) of respondents said that finance alone should be responsible for auto-enrolment, while 10% thought it should just be HR’s responsibility.

Mark Paraskeva (pictured), chief executive officer of the SME division at Iris Software Group, said: “Initially, [auto-enrolment] was thought to be achievable as an independent process that could be completed in a standalone fashion.

“But as payroll professionals have examined the legislation and attempted to bring it into practice, several key challenges have emerged.

“Firstly, to be effective, automatic-enrolment has to be processed in payroll. Payroll has access to employees’ [pay-as-your-earn] information for every pay period, and the payroll calculations must be completed before assessment can take place.

“This means that it really is the only practical approach to directly access the relevant information needed to assess employees’ eligibility for automatic-enrolment.

“If the responsibility is assigned to a different function or process, it will still need to work with payroll in order to access this information, and the inherent delays and opportunity for error may mean the difference between compliance or not.

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“Secondly, automation of the calculations at each pay period is critical due to the complexity and the need to comply with legislation by keeping records for six years.

“Thirdly, providing pension deduction information to the chosen pension provider at each payroll run is non-trivial and needs to be generated by payroll.”