Auto Enrolment Pension Scheme
The expected introduction of the long-discussed auto enrolment pension scheme has been rescheduled to January 2024. This is in part due to the COVID-19 pandemic which caused a series of setbacks to many policies. But what is auto enrolment, why is it being introduced and what can HR, Payroll and Finance departments and employers expect?
Auto enrolment Pension Scheme
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, more than 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 new date for the scheme to be introduced will be the January 2024
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 role as they look to address the new requirements.
To give you an idea of what kind of workload HR, Payroll and Finance departments can expect we have listed some requirements. These have been based on our insights from working on our UK clients’ auto enrolment pension scheme obligations. We expect that Irish employers will be required to:
- Gain a detailed understanding of the auto enrolment pension scheme and employer obligations
- Identify an eligible pension scheme that meets Auto Enrolments conditions
- 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 relevant employees into an appropriate pension scheme
- Assess and automatically enrol new employees into the pension scheme
- Keep track of required details, such as salary and age. As these will affect contributions, 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 legislation 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 where employees are already have a heavy workload. This is one of the many reasons why 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, Gender Pay Gap Requirements, GDPR regulations and updated Brexit legislation and organisations will need to prioritise their preparation to ensure compliance with the expected changes.
For more on Auto Enrolment Pension Scheme read:
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