Employers are being urged to think carefully before turning to their payroll provider for auto enrolment assistance. With many believing they are buying a full service, businesses could in fact be left with 70% of the work required for auto enrolment still to do themselves, work that is estimated to total 68 man days.
Modelling the 33 tasks that an employer has to go through to comply with auto enrolment legislation, Creative Auto Enrolment has found that payroll providers are supporting just 12 of these tasks.
According to the new analysis, support is missing on some of the most technical and challenging parts of the process that businesses are worrying about. It highlights that key stress points for businesses – including choosing the pension scheme and dealing with employees’ questions about opting out – simply aren’t covered in many ‘solutions’ and place a significant admin and responsibility burden onto employers.
David White, Managing Director of Creative Auto Enrolment said: “We are speaking to businesses on a daily basis who say they are covered for auto enrolment and working with their payroll provider, but then realise that what a payroll provider offers is only a tiny part of the full job in hand.
“While payroll providers’ solutions often look cheap upfront, it’s vital to recognise the cost of having to undertake the remaining 68 days work. We estimate these costs to be up to £18,700* for employers because the business will still have to shoulder a significant amount of the time burden to comply. It is important that employers are aware of this before they make their decision; we’re helping many companies who realise very late into the process that they aren’t being supported as they thought.”
According to Creative Auto Enrolment, the auto enrolment process takes up to 103 man days and the set-up is only one part of the job. Employers also have ongoing responsibilities at each payroll, on a weekly or monthly basis, that may not be covered either.
Mr White said: “It is critical that business leaders understand the entirety of the job before they choose to outsource just part of it thinking that is then ‘job done’. Hefty fines face those businesses that don’t meet their responsibilities in time.”
Some of the key tasks not covered by payroll providers include:
- Advising on which pension provider they choose for their employees’ money
- Advising on the choice of a ‘default investment fund’ for pension contributions
- Advising on how existing pension arrangements are effected
- Advising on cost defrayal strategies such as postponement and salary exchange that could save companies tens of thousands
- Choosing earnings definitions
Table detailing the key tasks required to comply with auto enrolment legislation and what payroll providers are, on average, offering
For further information on Creative Auto Enrolment’s end-to-end solution click here: http://www.creativeautoenrolment.co.uk/employers