Monthly Archives :

March 2023

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Are you overpaying to outsource your payroll?

Are you overpaying to outsource your payroll? 1920 1221 Growth Partners

We’ve developed a new online payroll cost-saving calculator to help businesses understand if they are overpaying for their payroll.

If you’re overpaying to outsource your payroll, you’d like to know, right? So, our payroll experts have created an easy-to-use online calculator to help businesses ensure they’re getting value for money.

How much do businesses pay to outsource their payroll?

When it comes to outsourced payroll, many payroll providers have bespoke pricing – with several factors affecting the price such as:

  • Number of employees
  • Pension auto-enrolment processing
  • Frequency of payroll
  • Additional integrated services

The payroll fee varies between providers and can often decrease the more employees you have. So, if you have 300 employees, for example, some payroll providers could charge you £6 per employee per month, but if you have 30 employees, they may charge you £10 per employee per month.

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It’s important to also consider any added extra costs for administering pension auto-enrolment or processing ad-hoc payments such as maternity pay or sick pay, for example. Also, be sure to check the terms and conditions regarding processing furlough payments or similar which had a huge impact on payroll providers in 2020.

 

Who’s liable for compliance with HMRC when you outsource payroll?

When outsourcing to a traditional payroll provider, you will find they will process your payroll for you, but your business will still be 100% liable for their work and compliance with HMRC. So, any errors leading to fines will still be billed to you.

This, however, isn’t the case with all payroll providers, so be sure to ask. At Growth Partners, we take on full responsibility for compliance with HMRC requirements, so all our clients outsource both processing and the liabilities to us.

 

What happens to pension auto-enrolment employer duties when you outsource payroll?

Most, if not all, payroll software has a pension auto-enrolment module to help payroll providers carry out the auto-enrolment assessment. However, like payroll, compliance with your pension auto-enrolment employer duties sit squarely with the employer even when the payroll provider you have outsourced your payroll to agrees to administer the duties on your behalf.

With Growth Partners, you won’t need to worry about compliance with your auto-enrolment employer duties again – our dedicated pensions team will take full ownership and responsibility for compliance with your auto-enrolment duties.

 

My finance team process payroll, why would I outsource my payroll?

Outsourcing payroll to a qualified and professional payroll service can reduce the costs and risks involved in payroll management. It also allows you to use your resource better – instead of processing payroll and keeping on top of complex payroll regulatory requirements and constant updates, your finance team is free to focus on business objectives and corporate goals.

 

How much do we charge for outsourced payroll services?

We charge a flat rate of £2 per employee, per week. This doesn’t change regardless of how many employees you have, or your payroll frequency. We also don’t want to bill our customers every time they ask for help, so one fee covers everything.

One fee covers everything

We provide an end-to-end service for payroll, pension and employee engagement services, so our flat-rate fee covers so much more than just outsourced payroll…

 

Payroll services

  • A guarantee that all your employees are paid accurately, on time
  • Full compliance with HMRC regulations
  • 24/7 online access to pay documents for your employees

Pension services 

  • All auto-enrolment administration – never worry about managing your employees’ pensions again
  • We take on full responsibility for ensuring compliance with your auto-enrolment duties
  • Our in-house pensions team handle all auto-enrolment communications and administration duties

Wellbeing services

  • Financial wellbeing services for your employees including support and guidance for your employees on their workplace pensions
  • Emotional wellbeing services including an Employee Assistance Programme (EAP) with access to professional, confidential counselling services in-person, online or by phone
  • Physical wellbeing for your employees including 24/7 access to a GP

Employee discounts

  • The latest range of benefits and discounts for your employees to help make their wages go further. 

Employment law service for employers

  • Unlimited phone and email advice from a dedicated HR law consultant
  • Support to draft bespoke items of correspondence
  • Review and preparation of contractual HR documentation
  • On-site assistance in a crisis
  • Tribunal preparation and representation

Employee engagement support

We give all our clients their own dedicated employee engagement manager to help

  • Employee engagement consultancy strategy for employer/employees
  • Ongoing support from a dedicated engagement specialist 
  • Employee engagement support payment designed to help you invest in your employee engagement activities

Get a quote

We know from research employees want easy access to their pay documents. Online access to pay slips, receiving pay earlier than payday, and an online chat to sort out pay issues are the most sought-after financial benefits.

77% of employees would use employee engagement services more if they were all in one place, like an app. With our all-in-one solution, your employees can access their pay, pension, and employee benefits all in one place.

See how much you can save, or even earn with our new cost-saving calculator – get a quote here

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New payroll calculator reveals how much businesses can save – or even earn

New payroll calculator reveals how much businesses can save – or even earn 1080 1080 Growth Partners

We’ve launched a campaign to highlight the benefits of regularly checking how much you’re paying suppliers for outsourced services such as payroll, pensions auto-enrolment, employee benefits, employment law support etc. Seven in ten UK businesses outsource services to third parties (YouGov 2019) 

Our new cost-saving calculator

We’ve developed a new cost-saving calculator to help businesses understand if they are overpaying for their outsourced payroll and other outsourced services. Our new online tool also calculates how much businesses will get from us in employee engagement support payments available – giving them a true reflection of how we may be able to help improve their bottom line.

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Amrik Birdi, our Head of Operations said:

“Many payroll providers have variable charges and charge extra for auto-enrolment processing, whereas our £2 per employee per week is a flat rate fee – which is great value for money. And this includes a range of employee engagement services too.

What we offer truly is a full end-to-end service for payroll, pensions, and employee engagement as we’re focused on helping businesses reduce costs and ensure compliance so they can grow.”

Scott Read, CEO of Employee Services added:

“We don’t want to bill our customers every time they ask for help, one fee covers everything. And the employee engagement support payment we give companies can make a big difference to their bottom line. We’re adding new services all the time to ensure our all-in-one solution for payroll, pension and employee engagement services can really help businesses thrive.”

A payroll provider and so much more

The payroll cost-saving calculator is designed to give you a free, no-obligation quote to help you understand how our fees compare to other costs you’ve been quoted. Specialising in providing an end-to-end service for payroll, pensions, and employee engagement, our new employee engagement support payment is factored in too, so the calculator is a true reflection of how we can help improve your bottom line.

Interested in switching payroll providers?

If you’re looking to outsource your payroll or switch your outsourced payroll you can get a no-obligation quote here or get in touch with our experts for a demo of our services.

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We’ve published new employee engagement research paper in partnership with insight experts KAM

We’ve published new employee engagement research paper in partnership with insight experts KAM 1152 1152 Growth Partners

We’ve commissioned a research project with hospitality research consultancy, KAM to gain more insight into the state of employee engagement services in the hospitality sector and help identify a potential link with the continued rates of job vacancies.

149,000 vacancies in the hospitality sector at the end of 2022, that’s a lot – and businesses are not maximising every tool in their armoury to attract and retain staff, according to KAM. The study reveals that hospitality businesses are not effectively communicating what they already offer; 75% of employees couldn’t find information about employee benefits while researching their hospitality job. 20% said they only found out during their interview and 15% had to wait until after they’d started in the role.

Scott Read, our CEO of Employee Services says:

“We’ve been keen to understand the relationship between the awareness and usage of employee engagement services and the number of vacancies in the hospitality sector. The research has really highlighted a potential problem – businesses may have employee benefits in place but if they’re not easy to access or communicated effectively, they’re not having an impact – potentially adding to the problem rather than helping to resolve it.”

Katy Moses, MD at KAM said:

“Hospitality businesses are absolutely missing a trick when it comes to attracting new employees with very few effectively communicating the level of employee benefits. So many companies offer phenomenal employee engagement services but very few are using this to attract potential candidates. Even current employees say they’re not made aware of what is available to them despite the clear impact they can have on staff retention.”

Key findings from the research include: 

  • 76% of people said employee engagement services meant they have stayed in a hospitality role longer

  • 83% of people said the offer of a specific health and wellbeing benefit contributed to them deciding to switch jobs

  • 95% of employees wanted to be made aware of any employee engagement services prior to making a decision to join a company

  • 77% of employees would use employee engagement services more if they were all in one place e.g. an app

The study also looks at happiness levels among current employees and found that 88% of people currently working in hospitality are happy in their role, this decreases to 78% for those working specifically in pubs and bars and is even lower for those working back-of-house (73%.)

→Download the full report here

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About Growth Partners: We’re on a mission to make employers’ and employees’ lives easier, happier and healthier. We provide an end-to-end service for payroll, pensions and employee engagement – giving your employees access to their pay, pension and employee benefits all in one place. We also take on the liability for compliance with all HMRC and Pensions Regulator requirements and provide you with your own dedicated employee engagement manager.

About KAM: Research and insight experts, providing the tools to understand your customer’s journeys. Using consumer and operator research and insights to help identify the ways in which your business can improve. Whether your customer is the end consumer, a hospitality operator or a wholesaler, understanding and influencing the customer journey is vital to any business. Our research and insight tools and services are designed to help you better understand why, where and how to create impactful and engaging customer journeys.

 

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Hospitality businesses fail to maximise employee benefits [New Research Paper]

Hospitality businesses fail to maximise employee benefits [New Research Paper] 1280 720 Growth Partners

We’ve partnered with KAM, to reveal the use and awareness of employee engagement services within the hospitality sector and understand to what extent employees are more likely to remain in a role because of them.

The study led by research consultancy KAM involved 500 employees within the hospitality sector as well as eight hospitality bosses. The findings clearly highlight how employers in the hospitality sector are missing a trick in effectively communicating the employee benefits they offer as part of their retention strategies.

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Unsurprisingly, there is a demand for certain employee engagement services and even an expectation from employees. And the availability of such services increases the extent to which they are likely to remain in a role – 75% say that offering employee engagement services makes the business a more attractive place to work and 3 in 4 hospitality employees said they were happier in their role because of employee engagement services.  In fact, offering certain benefits can have the power to encourage employees to switch jobs; 83% said their company offering a specific health and wellbeing benefit contributed to them deciding to switch jobs.

But despite high numbers of hospitality employers offering employee engagement services, the research found that many employees find them difficult to understand and access; 72% said they would use employee engagement services more if they were easier to access. The majority would find it easier if they were all accessible in one place, like an app (82%.)

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Key findings from the research

  • Employee engagement services make a business a more attractive place to work and there is an expectation for businesses to offer services which look after employees’ physical and mental wellbeing as well as their financial wellbeing.
  • Employers need to do a better job of communicating employee engagement services not just when advertising, but to current employees too.
  • Employees would use employee engagement services more if they were easier to access, most employees have them but find them difficult to understand and access.
  • Health and wellbeing benefits have the power to encourage employees to switch jobs with 83% of people saying the offer of a specific health and wellbeing benefit contributed to them deciding to switch jobs.
  • Online access to pay slips, receiving pay earlier than payday and an online chat to sort out issues with pay are the most sought-after financial benefits employees look for.
→Download the new Research Paper here

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When it comes to health and lifestyle the most popular benefits among hospitality employees are gym discounts, flexible shifts, healthy eating programmes and medical healthcare –  this is particularly popular among older employees. And when asked about financial benefits, 24/7 online access to pay documents, the ability to receive their pay earlier than payday and an online chat service to query/sort out issues with their pay slip came top.

This research has highlighted how employers may have employee benefits in place but if they’re not easy to access or communicated effectively, they’re not having an impact – potentially adding to the problem rather than helping to resolve it.

 

Do you need help bringing services together all in one place?

We provide employers across all sectors with a cost-effective end-to-end service for payroll, pensions and employee engagement services. If your workforce could benefit from their pay, pension and employee benefits all in one place, book your no-obligation demo of My SMART-e here.

Did you know? We provide all our clients with an employee engagement support payment and a dedicated employee engagement manager. Contact us today to find out more about how we can help you to reduce costs, attract and retain employees, increase productivity and ensure compliance.

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We support food bank charity The Trussell Trust to stop UK hunger

We support food bank charity The Trussell Trust to stop UK hunger 1152 1152 Growth Partners

We’ve chosen The Trussell Trust as our new company charity, committing to raise vital funds for food banks providing emergency food and support to people across the country.

Each year we invite our employees to nominate a charity to benefit from our company fundraising activities – and this year Trussell Trust food bank was chosen as the nominated charity.

Katie Taylor, Executive Business and People Manager said:

“We feel it’s really important for our team to have their say in nominating and voting for the charity we focus on each year as it helps to drive engagement in the charity activities, as well as a chance to do something for a charity that means something to at least one of our team. 

Katie added: 

“As always, the team is taking our latest challenge very seriously… 16 of us have been keeping active throughout March, challenging ourselves to reach a daily 10,000 steps goal. Not only has this encouraged our employees to move more which is great for their wellbeing, but it has already raised enough funds to fill two shopping trolleys of food for donation.

We’ve donated 147kg of food to The Trussell Trust so far this year and are planning to donate much more with the range of fundraising activities we are working on.”

About The Trussell Trust

With a record 2.5 million emergency food parcels given to people in crisis in the past year alone, Trussell Trust is campaigning for change to end the need for food banks in the UK.  You can download their latest research into hunger and destitution here. For a list of food banks and how to donate find out more here.

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How New Forest Hotels improved benefits to employees while also improving payroll efficiencies

How New Forest Hotels improved benefits to employees while also improving payroll efficiencies 1152 1152 Growth Partners

The New Forest collection is made up of hotels, restaurants, and a pub all in the heart of the New Forest providing visitors with access to the breathtaking location. Employing a large workforce from chefs to receptionists, they were looking for ways to attract the very best talent.

The hospitality industry has been impacted by the pandemic and has since faced a huge candidate shortage on top of rising supply costs and decreased demand due to the cost-of-living crisis.

“We were originally looking for a professional payroll company to help with the administration of processing payments to our staff, Growth Partners presented the My SMART-e app to us and we loved it. They provide an all-in-one solution so little did we know they were able to help us in other areas of the business too.”

We’re working with New Forest Hotels to:

1. Streamline payroll processing

Reducing the load on their finance team and relieving them from the burden of keeping on top of pension auto-enrolment for a large, changeable workforce.

2. Support employee financial, physical and emotional wellbeing

By giving their staff access to thousands of employee discounts plus confidential emotional and physical wellbeing benefits – all in the same place where they access their pay documents.

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“Our payroll team had been processing payroll and pension auto-enrolments for many years with employees on varying contracts, we knew there was an easier, more efficient way to do it. Growth Partners took on the payroll responsibilities – and it was seamless. The transition was fantastic and the service, exceptional.

So, our employees can now access their pay and pension documents as well as a range of discounts (which has helped them financially in these uncertain times) plus an online GP, health checks and much more via their secure My SMART-e app. Our staff love it – it’s been really well received, and we see it as a huge benefit, not only to our current employees but when attracting additional staff too.”

Do you need help streamlining your payroll process or bringing services together all in one place?

We provide employers across all sectors with a cost-effective end-to-end service for payroll, pensions and employee engagement services. If your workforce could benefit from their pay, pension and employee benefits all in one place, book your no-obligation demo of My SMART-e here.

Did you know? We provide all our clients with an employee engagement support payment and a dedicated employee engagement manager. Contact us today to find out more about how we can help you to reduce costs, attract and retain employees, increase productivity and ensure compliance.

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  • Amrik Birdi
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Spring Budget 2023: How do the payroll announcements impact your business?

Spring Budget 2023: How do the payroll announcements impact your business? 1196 1308 Amrik Birdi

The Chancellor announced some important changes in the Spring Budget 2023, including some key announcements impacting payroll.

We’ve taken the opportunity to summarise some of the key measures set to be introduced from the view of business owners and finance directors with responsibility for payroll.

Tax rates and thresholds

It was announced that the following will remain frozen:

  • Standard Personal Allowance (£12,570)
  • Income Tax rates (20%, 40% and 45%)
  • Income tax threshold (basic and higher rate threshold)

However, from 6 April 2023, the additional rate income tax threshold will reduce from £150,000 to £125,140.

There were also some important updates in respect of National Insurance Contributions (NIC), including:

  • NIC thresholds will remain frozen
  • Rates of NIC for directors who are subject to an annual earnings period will revert to being the same as for other employed earners
  • Rates of Class 1A NIC on benefits-in-kind and Class 1B NIC payable on PAYE Settlement Agreements will revert to 13.8 percent.

Helping people back to work

Where both parents are employed, and each earns less than £100,000, the introduction of free childcare hours for all children from the age of nine months could help many parents return back to work. This will be introduced in stages from April 2024.

Further measures, including more wraparound care for school age children to also facilitate the return of parents to the workplace.

Helping people to stay in work

In a drive to encourage over 50s back into the workforce, the Chancellor announced:

  • The annual allowance (annual limit on UK tax relieved pension savings) will increase from £40,000 to £60,000,
  • Higher earners with ‘adjusted income’ of over £260,000 will still be subject to tapering of their annual allowance, but the maximum taper will result in a £10,000 annual allowance, relative to £4,000 at present.
  • Removal of the lifetime allowance.

Increasing employee engagement

The Chancellor confirmed:

  • Enhancements to tax-advantaged Company Share Option Plan (CSOPs), which is a tax-advantaged employee share scheme, which will see the employee share options limit doubled from £30,000 to £60,000,
  • The ‘worth having’ condition, which limits which types of shares are eligible for inclusion within a CSOP scheme, will be removed,

Charities and gift aid

Charitable tax reliefs are to be restricted to UK charities only, with donations to charities located in the EU and EEA no longer qualifying for UK charitable tax reliefs from April 2024. This will impact individuals who claim higher rate relief on donations to such non-UK charities.

Upcoming important government consultations

In summer 2023, the Government will consult on informal and ad hoc flexible working arrangements between employees and employers to better understand how these operate.

Additionally, the Government will consult on how the tax system might incentivise increased employer provision of occupational health support. This might potentially include expanding benefit-in-kind exemptions for employees and an enhanced deduction for the associated costs.

More information

See how new legislation may impact your responsibilities over the next 12 months by downloading our Payroll Changes summary.

 

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Need help navigating these key payroll announcements?

The announcements from the spring budget will affect businesses differently. Navigating any legislative changes and ensuring your organisation understands and implements the proposed changes can be challenging, especially given the financial and/or legal penalties associated with non-compliance – not to mention the negative impact it can have on the wellbeing of your staff.

To help understand how the announcements in the Spring Budget affect your organisation, you can contact our business growth experts

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page and read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

Amrik Birdi, Pension Consultant at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

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Spring Budget 2023: What do the pension announcements mean for you and your employees?

Spring Budget 2023: What do the pension announcements mean for you and your employees? 1920 1413 Amrik Birdi

In the run-up to the Spring Budget, there were expectations that this could be the most significant budget for pensions since the freedom and choice reforms announced in the Budget 2014 – and the Chancellor certainly didn’t disappoint in that regard.

The announcements made by the Chancellor in the Spring Budget will have far-reaching implications for high earners. We break down the key announcements below and explain what they mean for employers and their workforce.

  • Pension Annual Allowance will increase from £40k to £60k – the pension annual allowance (AA) is the total amount of money that can be paid into the pension in any tax year without the member/employee incurring a tax charge. This includes both Employer and Employee contributions. It was either £40,000 or 100% of total earnings – whichever is lower. But it’s now going up to a maximum of £60,000 on 6 April 2023. 
  • Tapered Annual Allowance will increase from £4k to £10k – certain higher earners may be impacted by a tapered annual allowance, which gradually reduces the amount you can save into a pension plan each tax year depending on your earnings. The Chancellor has now confirmed that the tapering won’t reduce the allowance to any lower than £10,000 (previously set to £4,000).
  • Money Purchase Annual Allowance (MPAA) will increase from £4k to £10k – when an individual starts to drawdown or cash in the taxable part of their pension, MPAA is triggered. This means the individual will see their annual allowance reduced from £40,000 to £4,000 each tax year. The MPAA is now going up from £4,000 to £10,000 – making it easier for people to keep working and saving once they’ve started taking money from their pension.  
  • Lifetime allowance (LTA) will be removed entirely  – LTA is the total savings you can build up in all your pensions in your lifetime. Previously, the LTA limit was set to £1,073,100. This meant those who exceeded this limit would be liable to a tax charge of up to 55% on the amount over the allowance. The Chancellor announced that the lifetime allowance would be removed completely, and no one would face a lifetime allowance tax charge from 6 April 2023.

An important consideration for employers

Each of these changes on their own would see many people positively impacted when it comes to pension savings:

  • The Pensions Annual Allowance and Tapered Annual Allowance boost will benefit many higher-paid workers.
  • The increase to the Money Purchase Annual Allowance will directly benefit many people who’ve had to dip into their pension due to the cost-of-living crisis whilst still working, allowing them to contribute more into their pension to refill their pension pot without fear of a tax charge.
  • Abolishing the Lifetime Allowance opens doors to use pensions to pass on unlimited amounts of wealth, tax efficiently, to the next generation.

Employers will need to consider how the announcements could impact employee behaviour as they look to maximise the benefits of these changes and their employee benefits offerings. This could include (but is not limited to):

  • dealing with re-enrolment requests
  • managing employee requests to increase contributions, including ad hoc payments into their pension plans.
  • reviewing life insurance arrangements
  • reviewing benefits employers have offered to higher earners, particularly those higher earners previously impacted by the Lifetime and/or Annual Allowance.

As employees grapple with how to maximise savings in the new system, employers could benefit from greater support in balancing the opportunities and risks and ensuring their valued workforce have access to the support needed to understand the changes and its implications to get the best outcomes.

Need some help navigating these pension announcements?

Pensions can be complex; however,  our business growth experts can support you and your employees.

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page and read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

Amrik Birdi, Pension Consultant at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

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Government backs bill which will extend pension auto-enrolment to younger and lower paid workers

Government backs bill which will extend pension auto-enrolment to younger and lower paid workers 1920 1282 Amrik Birdi

New plans to expand auto-enrolment were backed by the Department for Work and Pensions (DWP) on Friday 3 March and are likely to be phased in early to mid-next year.

Auto-enrolment (AE) laid the foundation for a new era of pension savings, and since its introduction in 2012, the number of people saving into a workplace pension has doubled. To build on this success, the Department for Work and Pensions (DWP) confirmed on Friday (3 March) that it will support proposals to expand auto-enrolment – measures which will see auto-enrolment extended to younger people and lower paid workers.

In this article, we will explore what this means for employers.

What happens currently with pension auto-enrolment?

Under auto-enrolment, UK employers are legally required to put all their ‘qualifying’ employees into a workplace pension and contribute to their pension savings.

A ‘qualifying’ employee is someone who:

  • works in the UK
  • is at least 22 years old, but under State Pension age, and
  • earns more than £10,000 a year.

The minimum contribution (3% employer and 5% employee) applies to any earnings over £6,240 up to a limit of £50,270 (in the tax year 2022/23). This slice of the employee earnings is known as ‘qualifying earnings.’

What are the new proposals for expanding pension auto-enrolment?

The Private Members Bill looks to grant two extensions to auto-enrolment:

  1. Abolishing the £6,240 lower earnings limit for contributions
  2. Reducing the age for being automatically enrolled from the current 22 to 18.

In its press release, DWP stated that ‘lowering the age at which eligible workers must be automatically enrolled into a pension scheme by their employers from 22 to 18 would make saving the norm for young adults and enable them to begin to save from the start of their working lives’.

In addition, it said ‘the removal of the lower earnings limit would support those with low earnings and multiple jobs by ensuring they are saving from the first pound earned’.

When are the changes being introduced?

While the Bill will have to complete its remaining stages in the House of Commons and will also need to be approved by the House of Lords, Former Pensions Minister, Steve Webb, stated that this was “unlikely to be a problem with government support”.

With the next General Election to take place no later than January 2025, we anticipate the phasing of these proposals early to mid-next year.

How will the changes impact employers?

  • Reducing the age threshold from 22 to 18 may increase the pool of ‘qualifying’ employees for many employers.
  • Deducting pension contributions from the first pound earned – as opposed to deducting contributions from the slice of the employee earnings which fall between the £6,240 and £50,270 bracket – will mean the 3% employer contribution will need to be calculated from an expanded portion of the employee earnings.
  • Payroll teams will need to ensure the necessary changes are implemented in a timely manner to maintain correct deduction of contributions.
  • Member communications need to be considered – employers will need to liaise with their pension provider to understand member communications regarding both content and timing, as the changes will invariably have an impact on the employees’ take-home pay.

There is a statutory requirement for the DWP to carry out a consultation before releasing the official implementation approach and timings, so we don’t expect the Secretary of State to exercise its powers to amend the age limit and lower qualifying earnings limit for auto-enrolment until next year.

Employers could benefit from having early conversations about what the change means for them because the proposals are likely to impact employers in respect of both their direct and indirect costs resulting from higher employer contributions, administration costs arising from embedding the changes to their payroll system to ensure compliance with its auto-enrolment employer duties, as well as ensuring members are communicated with through appropriate channels before, during and post implementation of the aforementioned proposals.

Need some help with pension auto-enrolment?

Pensions can be complex; however, our in-house experts you can speak to our business growth experts who can help simplify as well as support you with your auto-enrolment compliance requirements.

For more information about unburdening your business from payroll and pension compliance visit our SMART Employment page and read more about supporting your employees’ financial wellbeing, emotional wellbeing and physical wellbeing.

 

Amrik Birdi, Pension Consultant at Growth Partners

blankAmrik has a wealth of knowledge in pensions having joined Growth Partners from KPMG where he was responsible for advising companies and trustees on independent DC provider procurement exercises, DC investment strategy review, DC pensions strategy review, automatic enrolment compliance, and meeting ongoing governance requirements. Amrik spent three years before this as a Pensions Guidance Specialist at Pensions Wise helping members understand their pension and retirement options, empowering them to take control of their retirement journey. With a Diploma in Regulated Financial Planning and Certificate in DC Governance, combined with a Degree in Economics, Amrik is a fully qualified pensions consultant and able to offer strategic support to our clients on their options for workplace pension schemes and auto-enrolment.

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