Is your payroll ready for auto enrolment?

By Mattioli Woods

22 Apr 2015

With many employers now fully involved in the auto enrolment process, it gives us the opportunity to reflect on what key areas must be focused on to ensure it is a success.

By Taylor Patterson.

One of these key areas is ensuring payroll software is ready to work in conjunction with auto enrolment and your pension scheme.

As part of auto enrolment, you are required to assess staff every pay period to see if they need to be auto enrolled and if they do, then calculate the contribution they require from the employer and the employee into the pension scheme. There are several ways of doing this, however, the most common place for this to be done, and arguably the tidiest place for this to be done, is through payroll.

When set up correctly and using the appropriate software, this can work very well and provides employer support for much of the ongoing burden of assessing staff, record keeping and administration of auto enrolment. It is paramount, however, to ensure the software is set up correctly in the first place.

What should an employer consider with a payroll system?

Assesses your workforce – this is the process of identifying if any member of staff needs to be auto enrolled. The assessment of the workforce must be carried out each pay reference period.

Allows the use of postponement – as employer, you have the option of postponing the auto enrolment of staff for up to three months, for example to tie in with probationary periods. However, this can only be done if the software you are using can facilitate this.

Calculates pension contributions – once the workforce has been assessed and a proportion of staff are required to be auto enrolled, the next step is to calculate how much the employer and employee contributions must be. The minimum contribution levels are being phased in and it is important that the software automatically adjusts contributions in line with minimum contribution increases.

Handles opt-in and joining – Not all staff will need to be auto enrolled, however, all employees have a right to opt in and if they do so the employer must join them to a pension scheme. The software must be able to identify an opt in and calculate contributions accordingly.

Handles opt outs and refunds – employees who are auto enrolled can choose to opt out. Providing they do this within 1 month of joining, they can receive a full refund of the employee contribution that was paid into the scheme. The software must be able to refund contributions in the following pay period to employees and consequently deduct no further contributions for the employee.

Supports you in generating and issuing letters to your staff – communicating with employees is a core regulatory requirement of the legislation, and the right software can reduce the workload of the employer by producing employee notifications at the appropriate times.

Keeps records and provide reports – another time cost saving can be realised through your software, it may be able to keep records and provide regulatory reports as part of the ongoing auto enrolment process, this is one less job for the employer.

Interoperates with some or all pension scheme provider systems – this is another area that some software may fall down. Each pension provider has unique requirements for joining members and paying contributions. A common way of doing this is through a file upload onto the pension provider website. Payroll software is capable of producing a file ready to be uploaded which will then auto enrol employees and also notify the provider of the contributions payable. It is important to check the software can produce both a joining and contribution file and that they can do it in the format required for your pension provider. As you can see, payroll software has the potential to assist you in much of the auto enrolment employer duties, however, it is essential that everything is set up correctly within the software and it can provide the support necessary.

Latest news

1

University of Central Lancashire celebrates hat-trick of wins at Educate North Awards University of Central Lancashire winners at Educate North Award Winners 2025

University of Central Lancashire celebrates hat-trick of wins at Educate North Awards

04 Apr 2025

2

The Villa’s sister venue shuts its doors The Villa Levens and The VillaWrea Green (Image credit: The Villa Levens and The Villa Wrea Green)

The Villa’s sister venue shuts its doors

04 Apr 2025

3

PM urged not to retaliate over tariffs Manufacturing

PM urged not to retaliate over tariffs

03 Apr 2025

4

CMAC Group appoints Matthew Ratcliffe as chief operating officer Matthew Ratcliffe CMAC

CMAC Group appoints Matthew Ratcliffe as chief operating officer

03 Apr 2025

5

For sale signs at The Villa Villa Wrea Green has been brought to market (Image credit: The Villa Wrea Green)

For sale signs at The Villa

02 Apr 2025

Pc Prestonmacan Gif980x120 March
Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
Lancashire Net Zero Carbon Conference
Net Zero Carbon Social 1200px
Networking
18 Jun 2025

Lancashire Net Zero Carbon Conference

Crow Wood Hotel & Spa Resort, Burnley, BB12 0RT

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

RISE - The Academy for Female Leaders and Managers
WENDY BOWERS RISE Illustrstion copy.jpg.jpg
LBV Hub Seminars
02 Apr 2025 - 08 Oct 2025

RISE - The Academy for Female Leaders and Managers

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:00 - 15:30

Lancashire Business Expo 2025
https---cdn.evbuc.com-images-880395853-4862066883-1-original.20241022-091152-2.jpeg.jpg
LBV Hub Exhibitions
04 Apr 2025 - 04 Apr 2025

Lancashire Business Expo 2025

Sir Tom Finney Sports Centre, Preston, PR1 2HE

09:00 - 15:00

The Business Network Central & East Lancashire
LBV Hub Networking
24 Apr 2025 - 24 Apr 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

People Power: Exclusive Event Series
Stay ahead in 2025.jpg.jpg
LBV Hub Seminars
29 Apr 2025 - 29 Apr 2025

People Power: Exclusive Event Series

People's History Museum, Manchester, M3 3ER

17:00 - 21:00

Planning for the future + navigating Inheritance Tax changes
Planning for the future + navigating Inheritance Tax changes for website.png.png
LBV Hub Seminars
01 May 2025 - 01 May 2025

Planning for the future + navigating Inheritance Tax changes

Stanley House Hotel, Mellor, Blackburn, BB2 7NP, Blackburn, BB2 7NP

08:00 - 10:30

A night at the races
1.png.png
LBV Hub Dinners / Balls
02 May 2025 - 02 May 2025

A night at the races

Morecambe FC, Morecambe, LA4 4TB

19:00 - 23:59

Innovating business solutions through PhD Partnerships
30478 Skills Bootcamp open day setting.jpg.jpg
LBV Hub Networking
07 May 2025 - 07 May 2025

Innovating business solutions through PhD Partnerships

University of Central Lancashire, Preston , PR1 2HE

14:30 - 15:30

Celebrating 50 years of KTP
UCLanAerialCampus.jpg.jpg
LBV Hub Networking
07 May 2025 - 07 May 2025

Celebrating 50 years of KTP

University of Central Lancashire , Preston, PR1 2HE

16:00 - 18:00

Research and Knowledge Exchange Showcase
13421_research_knowledge_exchange_2025_600x300.jpg.jpg
LBV Hub Awards
07 May 2025 - 08 May 2025

Research and Knowledge Exchange Showcase

University of Central Lancashire , Preston, PR1 2HE

09:00 - 17:00

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more Lbv121 Online Graphic
Subscribe now

Weekly news bulletin