The Pensions Regulator has released a guide that will help payroll software developers ensure their products address workplace pension reforms.
The Pensions Act 2008 gave the regulator a new responsibility to maximise compliance with new employer duties to automatically enrol eligible staff into workplace pension schemes.
Between October 2012 and September 2016, employers will be required to automatically enrol all their eligible jobholders into a qualifying pension scheme and make a minimum contribution of a jobholder's qualifying earnings into the scheme (this contribution will be increased in phases).
A jobholder who reaches 22 must be automatically enrolled in a qualifying scheme by the employer. There is a qualifying earnings band which is currently any earnings over £5,715 and less than £33,540 per annum.
Qualifying schemes are pension schemes that satisfy the quality criteria prescribed in the Pensions Act 2008. The criteria establish a minimum standard for the level of contributions made to the scheme or the level of benefit provided.
The new guide has been prepared specifically for a technical software audience. General guidance on the forthcoming duties, targeted at large employers and advisers, will be published next month, said the regulator.
The guide pays particular attention to payroll software as this is expected to play a key role in enabling employers to comply. It sets out how existing and new payroll facilities might assist employers to meet their new duties.
The assessment of earnings for automatic enrolment, the calculation of pension contributions on time, and the provision of the necessary records to demonstrate employer compliance are all activities which payroll software can support, says the regulator.
Charles Counsell, interim executive director for employer compliance at The Pensions Regulator, said: "We know that the payroll industry is already gearing up for pension reform. We want to do everything we can to support these preparations and this guidance is a major part of that."
Counsell added: “Ensuring that payroll facilities are designed and maintained with workplace pension reform in mind is going to be crucial. Payroll functions won’t provide all the answers for employers when it comes to fulfilling their new duties but they will make a big difference.”
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