KEY POINTS
- Fines of up to £10,000 a day for auto-enrolment non-compliance are serving to focus employers’ minds.
- Aviva believes its Automatic-Enrolment Manager for Employers (AME) is one of the most complete compliance tools on the market.
- AME can also be used by HR and finance departments to model and control their overall spend on pensions.
Ask any employer that has started the pensions auto-enrolment process and most will say the same thing: complying with the letter of the law is nigh on impossible.
But fines of up to £10,000 a day for non-compliance, and the fact that The Pensions Regulator will be looking to make an example of persistent offenders, are helping to focus employers’ minds.
The problem is the complexity of the law. For example, there are three categories of worker: one must be auto-enrolled, another must be offered membership with an employer contribution and a third must be offered membership only.
Then add waiting periods, employees who are already members of the scheme, and those with current contributions below the minimum level, and you soon have enough permutations to confuse even the most adept pensions professional. And these examples are only the tip of the iceberg.
Most pension providers have built systems to cover their part of the process, such as default investment fund selection and opt-out, but they have not put as much effort into helping employers with compliance. So what auto-enrolment help is out there for employers?
Aviva believes its Automatic-Enrolment Manager for Employers (AME) is one of the most complete compliance tools available.
Compliance
AME, designed to make auto-enrolment easier for employers, was launched in September 2012. It takes the compliance burden away from employers, so they do not have to employ people to work out which staff should be enrolled and which should not. Most importantly, employers’ worries about whether they are compliant with auto-enrolment regulations will be dissipated.
AME focuses on all employees, delivering the right communication to the right staff at the right time, either electronically via email or in printed letter form, depending on an employer’s needs.
When workers are enrolled, employers must tell them what their options are, what contributions they must pay in and how they can opt out.
AME also informs payroll departments which staff need to be enrolled, regardless of the pension scheme(s) used, when they need to be enrolled, and highlights contributions that fall below legal minima.
In delivering all this, AME can potentially save employers thousands of pounds in HR and payroll costs by removing the need to work out manually which employees should be enrolled, the information they should be sent and the contributions that should be collected from them.
AME can also be used by employers’ HR and finance departments to help them to model and control their overall spend on pensions, based on various hypothetical take-up rates in advance of their auto enrolment staging date.
Unlike other compliance systems, AME can return results to organisations within seconds, rather than hours or days.
Employers starting the auto-enrolment journey should invest time now to make sure they get it right. Otherwise, they could be storing up big problems for the future, which could prove costly.
John Lawson is head of policy, corporate benefits, at Aviva UK
This whitepaper has been written by Standard Life
