Despite the present surge in employers registering for the auto-enrolment pension scheme, many Irish Employers, and especially SMEs are experiencing difficulties. Extra administration burdens, even with automation, while navigating new compliance with Government guidelines to avoid penalties is proving to be challenging to employers. Rising costs and budgeting, along with payroll integration and problems managing existing pension schemes alongside the new auto-enrolment system are also important issues from an employer’s viewpoint. This article aims to explore these concerns and looks at possible solutions.
Payroll Integration and Administrative Burden
Employers are facing challenges to ensure that their existing payroll software can handle the new system, automatic updates and complex deductions. Managing existing pension schemes along with the new auto-enrolment system creates concerns to ensure the present scheme meets the criteria necessary to exempt staff from auto-enrolment. Employers are concerned regarding resources required for data submission, registration of new employees and the ongoing monitoring of costs involved despite the centralisation of the system by NAERSA. Employers need to ensure that their payroll systems are up to date and can handle these new contributions which may be a significant hurdle for some businesses. GDPR concerns are also an issue.
Each business must assess the financial impact of implementing the new auto-enrolment system, plan and budget for additional costs along with additional staff training. As mandatory employer contributions increase over time this may impact cashflow and businesses need to budget for these additional payroll costs. Mandatory employer contributions add to labour costs and this extra cost is very concerning for SMEs.
Employees may have queries and questions regarding opt-in/opt-out options and pension comparisons if there is a company pension option also. If there are two schemes in operation there is the potential for employee resentment if not managed correctly. There is concern that some employees may not understand the benefits and rules of the scheme. Employment contracts may need to be reviewed and handbooks updated to ensure full compliance of the auto-enrolment rules. It is also essential to ensure clear communication with staff to provide employees with an understanding of the new system.
There are potential fines for non-compliance with the National Automatic Enrolment Retirement Savings Authority (NAERSA). Meeting NAERSA’s reporting requirements is mandatory with the burden firmly on the employer.
The auto-enrolment pension scheme is creating payroll headaches for many businesses and especially SMEs. Outsourcing payroll and pension tasks are potentially the best option for some businesses and may be ideal for managing administration complexities, updating payroll systems and data handling along with GDPR compliance. Many payroll providers can reduce risk by handling eligibility rules and reporting. These companies provide expertise and can manage the financial burden, freeing up valuable time and reducing extra investment required for a functioning and compliant payroll department.
Outsourcing payroll companies reduce the administrative burden through tracking employees, calculating contributions and dealing with all matters relating to NAERSA.
Outsourcing reduces the risk of penalties by ensuring that complex legislation is complied with while keeping up to date with any changes in legislation.
Outsourcing payroll providers possess the most up to date payroll processing software in order to process payroll deductions seamlessly and avoid any payslip errors which can have a damaging effect on employee-employer relationship.
The tracking of opt-out and re-enrolment of employees requires time and resources. Time is precious for many SMEs who would rather invest time in developing other areas of their business.
Outsourcing providers are up to date with expertise on changing legislation, payroll software and continuous upskilling and so are adaptable to employment challenges and adjustments. Outsourcing removes the need for regular review of in-house auto-enrolment processes and make sure that the process is running smoothly with no errors.
It is recognised that the cost of engaging a payroll outsourcing company greatly offsets the investment required to navigate and run a complex auto-enrolment system in-house, and for this reason outsourcing may well be the best solution to alleviate any concerns or challenges. There are many excellent payroll outsourcing companies in Ireland on hand to help and while it is a big decision to outsource, there are potentially wide stretching benefits!
