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If you’re currently running your payroll in-house but have decided to outsource, or you’re thinking of changing your payroll administrator, how can you identify a good payroll provider? Payroll is too important to chop and change too often, and of course you want to move to something better than you’ve already got!
There are some key areas you can consider before making your move, over and above just the cost. Receiving a good service is top of most people’s wish list, but how do you define a good service, or even a great service?
A good payroll bureau will have experienced staff, who you can speak to at any time of the day with your queries. They should have sufficient knowledge to be able to answer your questions about statutory pay issues, notice and holiday pay, tax and national insurance issues. A great payroll bureau will be proactive in keeping you informed about important changes, such as how to payroll benefits in kind and reminding you about national living wage changes if you pay staff minimum wages, and they will have extensive knowledge about workplace pensions.
A good payroll bureau will input the wage information you give them correctly, but a great payroll bureau will look at what’s in front of them and question it if looks odd or unexpected, because you don’t always get things right. A great payroll bureau will turn your payroll around the same day if they can.
A good payroll bureau will provide you with their standard suite of payroll reports and they will offer you e-Payslips, which are payslips that your staff can access online. A great payroll bureau will be able to produce bespoke reports in whatever format you want them in, including reports to your company year end for your accountant.
Technology comes into its own if you have a larger or more complicated payroll. A good payroll bureau will ask you to send in a wage collection spreadsheet each month and will input the figures manually. A great payroll bureau will vet the complex data each month and when they’re happy with it they’ll covert it into an import file that can be directly uploaded onto their software, reducing the risk of manual input.
All payroll bureaux should be aware of Data Protection issues and must ensure that payroll reports sent to you are securely password protected.
I’m proud to say that the Auto-Enrolment Bureau is a great payroll provider, and our aim in life is to make payroll easy for you, so please do get in touch if you’d like to make a change for the better!
When approaching your staging date, you need to think about payroll administration and auto-enrolment together, because the two are intrinsically linked when it comes to your workplace pension.
Setting up your workplace pension is only half the story, because it's your payroll software that will need to assess and categorise your staff every time you pay them, it should calculate and deduct the correct level of pension contributions and it will help you to correctly enrol your eligible employees. Your payroll administrator will need to upload a pension file to your chosen provider each month to confirm the contributions to be allocated to each employee.
Your payroll software should generate statutory letters for you because you’ll need to write to employees to tell them how they will be affected by auto-enrolment – are they to be auto-enrolled or can they opt in? How much will it cost? Who is your chosen provider? What must they do if they want to opt out or opt in? These letters are a legal requirement and must contain specific information set out by law.
Don’t assume your payroll software is ready to go. If you run your payroll in-house, chances are you’ll need to upgrade your software to include an ‘auto-enrolment module’ to deal with this administration (often at a cost), and you’ll have to learn a bit about pensions before you can use it – follow the software provider’s instructions to the letter! If you choose the wrong tax relief basis or pensionable salary, for example, it’s a real headache to unpick errors once the contributions have been deducted from pay and paid to the pension provider. And beware: the HMRCs free PAYE tool doesn’t do auto-enrolment at all.
If you’ve outsourced your payroll to a good bureau or your accountant, then should have upgraded their software and done their training, but we’re still coming across the odd payroll administrator who doesn’t offer full admin support and expects you to carry out assessments, statutory communications and data uploads to the provider. If you don’t want to do this yourself, then now’s the time to move your payroll. There are plenty of payroll administrators who will happily do this for you, including the Auto-Enrolment Bureau.
As always, getting the right advice at the outset is really important. If you would like to talk through your circumstances with an auto-enrolment expert, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
It’s fair to say that the most important decision you’ll make around auto-enrolment is the choice of pension scheme for your employees. Selecting the right provider at the outset can potentially save you and your employees many thousands of pounds over the lifetime of the scheme. So how do you go about choosing the right scheme for your business?
The government imposed a cap on charges for workplace pension schemes of 0.75% to make sure they offered good value for money - this is called the Annual Management Charge (AMC) and it’s a charge against your employees’ funds each year. Many providers have set their AMC at the top of the cap, but if you shop around you’ll find quite a few ranging from 0.5% up to the cap.
It can be quite tricky for a normal person (i.e. a non-pensions geek) to find out what a pension scheme’s charges are, because they’re not always clearly evident on the provider’s website. And the AMC isn’t the only charge to think about. Some schemes charge a monthly fee to the employer to use their scheme, which can be as much as £100 a month; others charge the employer a set-up fee, which is payable over and above any advice you may receive from your advisor. It’s well worth doing the research to find out what’s best for your business, or appointing an experienced advisor who can find out for you.
But it’s not all about charges – you need to know that the provider is well-established and their business is well governed. You want to make sure your employees’ pensions are in safe hands. You should expect a broad investment selection and good, steady history of performance. Customer service and payroll integration are also important factors in saving time and costs going forwards.
Understand what you’re signing up to – is it a master trust or a commercial provider? Many master trusts are not-for-profit organisations and all are set up as occupational pension schemes, governed by Trustees who must act in the best interests of their members. Commercial providers are for-profit and are set up as personal pension schemes. Your advisor will be able to explain the pros and cons of each, but it’s important that you understand what type of scheme you’re signing up to.
So the message is clear: don’t just go for an easy ‘default’ option - it’s really worthwhile spending a bit of time at the outset to choose your scheme carefully. If you think you might need to set up a scheme, or would like to talk through your circumstances, please give our friendly and experienced team a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
The UK’s Statutory Maternity Pay policy has been under fire from the TUC recently, saying the UK underpays maternity leavers in terms of weekly pay, but if you look at the SMP package as a whole, the UK offers much more than most other countries in Europe, and far in excess of the EU directive.
So what do we offer in terms of SMP?
In terms of leave entitlement, eligible employees can take up to 52 weeks’ maternity leave. The first 26 weeks of this leave is known as ‘Ordinary Maternity Leave’, the last 26 weeks as ‘Additional Maternity Leave’. The earliest that leave can be taken is 11 weeks before the expected week of childbirth, unless the baby is born early, and employees must take at least 2 weeks after the birth (or 4 weeks if they’re a factory worker).
Then in terms of pay, SMP for eligible employees can be paid for up to 39 weeks. For the first 6 weeks pay is based upon 90% of their average weekly earnings (AWE) before tax, and the remaining 33 weeks is paid at £140.98 per week, or 90% of their AWE (whichever is lower). To calculate AWE, you need to take an average of the employee’s gross earnings over a period of eight weeks up to and including the last payday before the end of the employee’s qualifying week. The qualifying week is the 15th week before the week the baby is due.
Tax and National Insurance need to be deducted from their pay as usual. As a small employer, you can claim back 103% of the maternity pay, or as a large employer who pays more than £45,000 a year in Class 1 NI, you can claim back 92% of the SMP paid.
Not everyone is eligible for SMP – there are some qualifying criteria. Your employee must have been on the payroll in the 15th week before the expected week of childbirth, they must have given you the correct notice and have worked for you continuously for at least 26 weeks up to the first day in the qualifying 15th week. Finally, they must earn at least £113 a week in the 8 week period over which AWE are calculated.
In terms of notice, an employee must tell their employer that they are expecting a baby at least 15 weeks before the baby is due. The employee should also confirm what date they want their maternity leave to start – this can be moved but the employee should give 28 days notice before leave starts. The employer should then confirm their Statutory Maternity Leave start and end dates and the SMP due, in writing, within 28 days of notice being given. Employees can change their return to work date if they give 8 weeks’ notice.
If the employee isn’t eligible for SMP, then you must give them a Form SMP1 and explain why they are not eligible.
SMP and pension contributions can be a tricky one because your payroll software might not work out the correct employer pension contributions, so you might need to over-ride the software! Under employment law, an employer should continue to pay the same employer contributions that they were paying prior to employee going on maternity leave, so contributions must continue at their current level, even though the employee’s income has dropped, but the employee will pay contributions based upon the SMP she’s actually receiving, so her actual income.
However, once SMP stops after 39 weeks and the employee is not receiving any pay at all, both employee and employer contributions can stop (although they don’t have to). The employee will remain an active member of the pension scheme, however, because contributions are just suspended. Once the employee returns to work and pay recommences, pension contributions will start once again.
If you currently run your own payroll in house, or if you’re an accountant or book-keeper who would like to outsource your payrolls to a professional payroll and pensions bureau so that you can focus on your core business, then we would love to help – please do get in touch on 0800 160 1233 or email firstname.lastname@example.org.
Setting up your own business is a hugely exciting prospect. It gives you the opportunity to do something that you really love, you can share your knowledge and experience with others, and of course you can be your own boss!
Having a business plan is important, and part of this plan might be that you’ll be taking on employees, either immediately or at some point in the future. So in terms of payroll and pensions, what do you need to think about when you take on your first employee?
First of all, you’ll need to set up a PAYE scheme with HMRC so that you can calculate and pay your employee’s wages and report the pay, tax and national insurance due for each employee to HMRC. You can set up your PAYE scheme online on the .GOV.UK website.
Then you’ll need to appoint a payroll administrator, or you’ll need to buy some payroll software and learn how to use it – get up to speed with the law around minimum pay requirements, tax calculations and statutory pay. To keep your costs down I would recommend that you run monthly payrolls rather than weekly.
There’s an additional cost to the employer over and above the employee’s salary which you might not be aware of, and that’s the employer’s national insurance (NI) contributions, which are 13.8% of an employee’s pay over and above the current NI threshold of just over £8,000.
You’ll need to tell HMRC about the tax and national insurance due to HMRC each pay period by sending a Full Payment Submission on or before pay day, and then paying the amount due to HMRC by the 19th of the following month.
Turning to your pension responsibilities, if you’re paying your employee more than auto-enrolment trigger of £10,000 a year, then you’ll need to set up a workplace pension for them. If you started paying your staff between 1st October 2016 and 30th June 2017 then your deadline for setting up a pension scheme will be 1st January 2018, or if you starting paying staff between 1st July and 30th September 2018 then your staging date will be 1st February 2018. It’s important to note that after 30th September 2017, the ‘phasing in’ of staging dates has finished, and if you start paying staff from September 2017 onwards, then you’ll need to set up a scheme straight away, within 6 weeks of paying your first employee, which is an extremely tight deadline.
It’s a good idea to get advice when you’re setting up your business so that you know exactly what you need to do by law. We can set up your PAYE scheme for you and run your payroll, and if you need a pension scheme then we can also help you with this when the time comes. So do get in touch if you need help – call Sarah or Adele on 0800 160 1233, or fill in your details on our Get Started page and we’ll get back to you.
The Pensions Regulator has relaunched their website to make it more accessible and relevant to small businesses. As more and more businesses are staging, many of them will chose a DIY route. It may seem a cheap way of meeting your duties, but is it really worth it?
You will need to research auto-enrolment. How does it affect you? When do you need to do it by? What do all these new terms mean? How much will it cost you?
You will need to pick a scheme – research the market, choose a provider and product.
You will need to design the scheme, choosing pay reference periods, setting a postponement policy and contribution basis.
You will need to set up the scheme with the provider and provide your payroll administrator with the details so that they can set it up on the payroll.
You will need to tell your staff that you have set up a scheme and explain how it will affect them in terms of cost, timing, postponement and benefits.
If you run your own payroll, you will need to assess your staff at your staging date, and every pay reference period after that.
You will need to issue statutory communications not just at staging, but for every payroll run thereafter, where there’s a change to someone’s AE status.
You will need to calculate contributions, notify the pension provider of those contributions, deal with opt ins, opt outs and refunds.
You will need to keep records of the scheme you have set up and the assessment details each payroll.
You will need to submit your declaration of compliance to The Pensions Regulator
*How much is your time worth? Will your scheme be easy to administer? Are you handling joiners and leavers correctly? Have you chosen the most cost-effective contribution basis? Is your scheme good value for money? How safe is the pension scheme?
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Auto-enrolment jargon is clarified - our qualified auto-enrolment experts will explain everything in plain English.
You’ll get expert advice to make sure that every aspect of your scheme design fits your business needs. Choosing the right design can keep costs down for you and your employees.
We’ll explain all of the technical stuff - how you can use pay reference periods and postponement to make the admin easier and, potentially, cheaper. We’ll make sure that you get tax relief right.
We’ve done the market research, so we know which schemes are suitable, which ones charge a monthly fee to small companies, and which ones only accept large companies or monthly payrolls. We also know which ones require minimum contributions or charge extra for fund switches.
If you use our AE FastTrack service, we will explain why we are happy to recommend The People’s Pension, a scheme we have chosen based on its merits (see blog post). If you use our Bespoke service, we’ll carry out a full market review of pension schemes to help you choose one.
We’ll set up the scheme for you and provide a document that tells your payroll administrator all they need to know, and it covers your record-keeping requirements for scheme records.
We’ll sort out your HR issues and employee communications for you, providing you with a Pension Policy for employment contracts and a decent employee announcement letter.
If you choose to outsource your payroll to us, we’ll do all the admin after staging – employee communications, contributions, data uploads, record keeping and declaration of compliance.
We’ve heard from small businesses who have come to us after they tried to do it themselves, and it’s often not a happy tale. As these business owners haven’t had the support they needed early on in the process, they often miss important deadlines, or set up a scheme that is complicated to administer through the payroll.
If auto-enrolment isn’t done right at the very beginning it can cost you dearly in time and expense in the long term.
There are lots of things you can DIY but, like plumbing or electrics, it is really worth getting the experts in for auto-enrolment!
If you think you might need to set up a scheme, or would like to talk through your circumstances, please give us a call on 0800 160 1233. We’ve got lots of useful information and guidance on our website if you need it: http://www.aefasttrack.com/
You actually have a couple of options – either do some fairly extensive research yourself and set up your own scheme with an online DIY solution - you’ll need to choose your scheme very carefully - or you can ask a specialist like us to do the job for you. If you don’t know anything about pensions it’s really difficult to know which route to go down, so I thought I’d just outline very briefly what you’d need to do if you do decide to DIY.
First of all you need to choose your scheme – there are well over 100 pension providers to choose from. Make sure you choose a scheme that’s approved by The Pensions Regulator or the FCA, and if you’re choosing a master trust then make sure it meets the Master Trust Assurance Framework set out by the Regulator, otherwise it could encounter serious problems when the Pensions Bill comes into force this year.
Compare scheme costs – employee charges, employer charges, contribution charges and administration charges. These can be quite hard to pin down as providers don’t always make them obvious on their website, but there will definitely be costs involved. Make sure you’re clear on what the costs are to you and your employees before you choose your scheme.
Look at investment performance and compare performance of each scheme over the last 3 years – has investment growth been slow and steady, or more risky and erratic?
You’ll need to design your scheme in terms of tax relief basis for employee contributions, postponement policy, salary and contribution combinations (which directly affect the contribution rates you’ll need to pay) and auto-enrolment pay reference periods. You’ll also need to make sure that your pension scheme integrates smoothly with your payroll software. Designing your scheme properly at the outset will save your business an awful lot of money in the long run.
It’s a good idea to provide your employees with clear and comprehensive communications about the benefits of your chosen pension provider so that they understand the value of the pension scheme you’re providing, and you’ll need to update your employment contracts and, if you have them, your staff handbooks.
It’s really important that you understand the processes behind auto-enrolment so that you know exactly who is responsible for each process. For example, who will be carrying out employee assessments each pay period, who calculates employer and employee contributions, who is responsible for producing and issuing statutory employee letters, who will be uploading a contribution file to your pension provider each week or month and who is going to deal with opt-ins, opt-outs and contribution refunds. You payroll administrator may offer to carry out these tasks on your behalf, but they may only choose to do some of this administration, in which case you need to pick up the rest.
One of the most critical things to get right is to provide your payroll administrator with clear instructions about how to administer your scheme through their payroll software. They will need to know how you’ve designed your scheme and who you’ve chosen.
If you don’t have the time to do all of this yourself, we can do it for you! We’re qualified workplace pension specialists and we’ll make sure you get it right first time. We charge a one-off fixed fee which is dependent upon the size of your business, and we’re happy to continue answering any questions you may have for the foreseeable future too, at no extra cost.
If you’d like to take the pressure off yourself and appoint a trusted, specialist company to help you instead, please give me or Adele Webb a call on 0800 160 1233, or fill in your details on our Get Started page and we’ll get back to you.
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What do our customers think..?
"We wanted to embrace Auto-Enrolment to get good pensions in place for our team early. We interviewed a couple of companies to assist us, and Sarah gave a very good case for her company. We are confident that we made the right decision! From selecting the right provider, through to setting up the systems and even presenting to our staff, Sarah and her team were excellent. I don't hesitate recommending the Auto-Enrolment Bureau to anyone looking to enrol their company. My only words of advice are, do it early!"
Richard Hardstaff, Director, Polydron (UK) Ltd