How accurate is your Auto Enrolment data?
Research published this month*, based on analysis of over 10,000 schemes, highlighted that Auto Enrolment (AE) data sent on behalf of employers to pension providers have a 50% error rate, and must be sent back for correction.
Common errors highlighted by the research include:
- Contribution amounts that are too high or too low;
- Confusion as to whether the scheme operates on a Relief at Source basis or Net Pay basis, and the impact on contributions;
- Contributions made for workers who do not belong to the scheme or have opted out;
- Wrong pension scheme identifiers;
- Inaccurate postcodes;
- Incorrect pay period dates.
This is clearly worrying for employers. Firstly, time spent by employers and pension scheme administrators dealing with errors which have been highlighted, can be considerable. Often, finding the solution can be complex. Without a good working knowledge and understanding of AE regulations, and the pensions scheme, including how to provide the correct data to providers, there is a risk that quick fixes are made to ‘fudge’ a solution, rather than identifying the true cause. This can inevitably lead to further problems, and costs, down the line, including penalties for non-compliance and more valuable time spent trying to fix, sometimes, complex problems.
Furthermore, there is the concern that many errors are not highlighted. The research found that many pension providers are not able to check the accuracy of information supplied to them, such as whether contributions are correct, as they do not collect the relevant information on employee pay. This places a great burden on employers and pension scheme administrators to get it right.
Jelf is fully aware of the many difficulties faced by companies in providing accurate data to pension providers, and the heavy burden of complex AE regulations and risks it can present to employers.
Through our AE audits we have been working closely with a number of clients to flag areas of risk, including where data issues have occurred. We work with clients to identify the root cause of any errors, and can also provide ongoing assistance and support through our administration services.
Please contact your consultant if you would like to know more about how we can help ease the administrative and regulatory burden of running your AE pension scheme.
*Research published by Pensionsync 13 September 2018
Marketing communication FP18.590