Auto Enrolment Pension Scheme and what to expect
The Taoiseach, Leo Varadkar, recently announced an expected date for the long discussed auto enrolment pension scheme – it’s anticipated that it will be up and running by 2021. But what is auto enrolment, why is it being introduced and what can HR, Payroll, Finance departments and employers in general expect?
Auto enrolment pension scheme – what is it?
As the name suggests, it is a scheme that requires employers to automatically enrol certain staff into an appropriate pension scheme.
Why is auto enrolment being introduced?
The volume of workers expected to rely primarily on the state pension when they retire is increasing (two-thirds of the private sector, approx. 1 million workers, currently do not have an occupational pension). This combined with an already struggling state pension system is among many factors driving the introduction of an auto enrolment pension scheme.
When will auto enrolment be introduced in Ireland?
The government is expected to publish a consultation paper on an auto enrolment pension scheme by the end of the year which should provide definitive dates. However, in a recent speech, Taoiseach Leo Varadkar noted that he expects that the scheme will be implemented by 2021.
What will auto enrolment mean for employers and their HR, Payroll & Finance personnel?
There will be new employer obligations that businesses must meet which will likely require addressing by HR, Payroll and/or Finance departments. To ensure compliance HR, Payroll and Finance personnel will likely see changes in their roll to address the new requirements.
To give you an idea of what requirements and workload HR, Payroll and Finance departments can expect we have listed some requirements, based on our insights from implementing and managing our UK clients’ auto enrolment pension scheme obligations, below:
What you will likely need to do:
- Gain a detailed understanding of the auto enrolment pension scheme and the new employer obligations
- Identify an eligible pension scheme that meets the conditions of the auto enrolment pension scheme
- Assess your workforce to identify relevant individuals, and possibly their categories in the scheme, based on auto enrolment classifications
- Inform relevant individuals of auto enrolment, their rights, their options and the pension scheme conditions etc.
- Enrol each current relevant individual involved in the business into an appropriate pension scheme
- Assess and automatically enrol each new individual involved in the business into the pension scheme
- Keep track of required details, such as salary and age, that effects contributions and compliance, and inform relevant individuals and parties of the changes
- Make employer contributions accurately and appropriately
- Process opt-outs and leavers
- Keep records of the enrolment process
- Report as appropriate
- Ensure ongoing compliance with the new obligations
Ensuring compliance with the most up-to-date legislations is a difficult and time consuming endeavour for most businesses, but one that is necessary to avoid the imposition of significant penalties. The workload of keeping up-to-date with the ever-changing regulations and implementing the required compliance tasks can be significant, especially if personnel have an already heavy workload. This is one of the many reasons more and more businesses are outsourcing their payroll function. Ensuring payroll compliance in the coming years will be made extra difficult and time consuming due to the auto enrolment pension scheme, the upcoming GDPR regulations, expected updating of legislation as a result of Brexit and PAYE modernisation – businesses should be prioritising their preparation to ensure compliance with the upcoming changes in regulations and obligations.
Here at PaycheckPlus we provide payroll outsource solutions that ensure compliance with the most up to date legislation and obligations. Our Payroll experts stay on the forefront of the payroll industry so you do not have to. We handle compliance and payroll processing allowing businesses to become more efficient – we do the paperwork so businesses can focus on their profits.
To ensure payroll compliance with the most up to date legislation and systems requirements and for expert support contact PaycheckPlus today.
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