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Pension Auto Enrolment Functionality

Karen Kirwan
Updated
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Contents

Introduction

The Accord Payroll pension auto-enrolment module is a set of routines run as part of the Accord Payroll calculation process to aid in the support and administration of pension auto-enrolment legislation. As opposed to using a 3rd party assessment module, the employee assessment and assignment of a default AE pension scheme in this Accord module is fully automated. Additionally there is no need for a transfer of information to a 3rd party pension provider at the payroll pre-update stage, i.e. an export of qualifying earnings then import of worker categories and pensions, and therefore no effect on existing payroll deadlines and cut off dates. All AE pension extracts are done after payroll has been run and updated.

 

IMPORTANT: This document uses typical Pension AE Configuration options although this can vary considerably from system to system.

The auto-enrolment process covers 5 key stages

  • Set up and initial activation up of AE module – Entering of staging and deferment dates, opt out period, default  AE Pension Scheme, qualifying earnings flags and setting date for first assessment on all workers.
  • Periodic Assessment of Workers – Run as part of the Accord Payroll calculation process, workers are assessed and categorised according to their age and qualifying earnings. According to their category they can be auto-enrolled on pension scheme, deferred or set to be re-assessed at a later date, typically the next payroll run.
  • Assignment of Default AE Pension Scheme – Eligible Job Holders will be automatically assigned to an Accord Pension Scheme.
  • Extract of Information for 3rd Party Pension Providers – Base data, assessment category and contribution details are run using a set of (post update) payroll exports.
  • Processing of Opt-Outs, Opt-Ins & Scheme Joiners – Workers that choose to opt in or out of a scheme will typically inform the AE pension provider directly. This information can then be fed to Accord for import via a 3rd party pension system. Workers opting out of the scheme in Accord will have their contributions automatically refunded (unless this information is supplied by the pension provider). Workers that have opted out will then be re-assessed after the statutory opt-out reassess window.
NOTE: The Accord Pension AE module does not currently provide direct support for the issue of supporting worker communications. 

 

Pension Auto Enrolment Module Parameters & Settings

The Accord AE Module uses the following key parameters (menu option Settings Miscellaneous | Parameters, Auto enrolment tab. There will be one set of AE parameters per Accord Payroll company.

IMPORTANT: The “Pension Auto Enrolment Module Parameters & Settings” section is for information only. All AE parameters and settings will be set by PBS during the AE module implementation and configuration stage. These parameters and settings should not be changed by users.

 

 

 

  Parameter Notes Default Value
1 Staging Date    
2 Default Accord AE Pension Scheme Number This will be the default AE Pension Scheme No that will be used for a worker that has been auto-enrolled.  
3 Pension Provider Employer Reference Optional  
4 Postponement Period (Months)   3
5 Postponement Period (Weeks)   12
6 Opt-Out Re-assess Period (Years)   3
7 Opt-Out Window (Months)   1
8 Invalid opt out weeks   2
9 Opt In threshold years   1
10 Qualifying Earnings The pension base set on Accord Payroll wage types
(Pensionable Pay 1 to 5)		  
11 Exclusion from postpone option Used where different postponement rules are applied to different workers 0
12 Use Department Level Parameters Use to accommodate multiple staging dates and AE Pension schemes in the same Accord company 0
13 Assess Processed 0-Paid Employees Use to include employees on the payroll calculation run with zero pay  
14 Autoenrolment Scheme Pension Provider Free Text for use in Pension Exports  
15 Payment Due Date (31-end month) To specify payment due date to pension provider. Primarily for use in Pension Exports Used for NEST exports
16 - 19 Pension Provider Text 1 –Text 4 Free Text for use in Pension Exports

Text3 is typically used for NEST Payment Source

Text4 is typically used for NEST Group
20 Pension %/Amount on Employee Record Used to flag that the default AE percentages should be set on the employee record (i.e. not kept on the pension scheme level)  
21 Default AE PS EE Pension %/Amount Default AE EE Pension Scheme % on Amount to set on auto-enrolment  
22 Default AE PS ER Pension %/Amount Default AE ER Pension Scheme % on Amount to set on auto-enrolment  
23 Warn if Default AE Scheme Set If this flag is ticked then the system will generate an exception if the employee is on the default AE scheme without being autoenrolled  

 

 

Default AE Pension Scheme

The Default AE Pension Scheme should be configured in Accord Payroll (an example shown below).

 

The following flags should be ticked for this scheme 

Default AE Scheme

Qualified AE Scheme

Do not deduct pension contributions outside joining to leave date range

Typically the contribution will be calculated as a percentage of QE between LEL and UEL bands. For entitled workers that have joined the AE scheme this will typically be based on all earnings with no automatic employer contributions.

 

Other Qualifying Pension Schemes

The switch Qualified AE Scheme should be ticked on all other pension schemes that are qualified pension schemes.

Employees on these schemes will be excluded from the auto enrolment process. 

 

Excluding Employees from the AE Process

To exclude employees from auto enrolment tick the ‘Excluded from auto enrol duty’ tick box on the employee record.

 

Opt Out Wage Types

Wage Types 529900 Pension EE Refund and 529901 Pension ER Refund are used to support the AE opt out process. The Opt Out wages types are typically imported but can also be entered manually. In addition to processing and (optionally) calculating refunds these Wage Types also do as follows:

1. Set the employee AE status to Opted out

2. Set the Opt Out Date

3. Set the End Date on the AE Pension Scheme

4. Set the Opt Out Effective from Date 

5. Set the Defer Re-assessment date to 3 years from the employer staging date

6. Record the opt-out event to the Pension AE History table

 

The opt-out wage types currently support the following refund options (WageType.Constant2)

  1. Amount to refund entered (or imported) from a 3rd party pension system e.g. NEST.
  2. Amount to refund entered (or imported) from a 3rd party pension system e.g. NEST and validated against accord contribution totals between AE date and Opt out date (a warning will be printed on the exception report if the amounts are different).
  3. Amount to refund calculated from accord contribution totals between AE date and  Opt out date.
  4. Amount to refund calculated from accord contribution totals between AE date and  Opt out date then validated against refund  entered (or imported) from a 3rd party pension system e.g. NEST (a warning will be printed on the exception report if the amounts are different).

Where Accord is calculating the refund the 2 Opt Out wage types can be chained i.e. only 529900 Pension EE Refund need be entered and 529901 Pension ER Refund will be called automatically.

This wage type should not be shown on the worker payslip.

 

Opt In Scheme / Joiner  Wage Type

Wage Type 530001 AE Opt In / Scheme Joiner is used for workers joining the AE pension scheme prior to auto-enrolment. The wage type will do as follows:

  1. Check the worker AE worker type. If the worker type is NEJ or EJ then the Opt-In Status will be set to Opt-In. Otherwise the Opt-in status will be set to Joined Default AE Scheme.
  2. Set the Opt-In Effective Date as the current period start date.
  3. Add the employee to the AE pension scheme with default percentages with the pension start date as the current period start date.

This wage type should not be shown on the worker payslip

 

AE Scheme Leavers

Wage Type 529902 AE Scheme Leaver should be used for AE Scheme leavers outside the AE Opt-Out Window i.e. these are scheme leavers as opposed to Opt-Outs. The wage type will do as follows:

  1. Set the end date on the AE Pension Scheme.
  2.  Set the Scheme Leave Date as the Opt-Out Date on the employee record.
  3. Set the AE Status to Scheme Leaver.
  4. Set the Deferral date to 3 years from the employer stowage type ging date (the same logic as for Opt-Outs).
  5. Set the effective date in the Opt In / Out effective date

The worker type will not be changed.

This wage type should not be shown on the worker payslip.

 

Eligible Job Holder Postponement

Workers that have previously been assessed and not auto-enrolled and then have an increase in earnings to take them over the earnings trigger will be automatically be postponed for another 3 months after which they will be reassessed. This is to check that the increase is not a ‘spike’ in earnings.

 

 

The Pension Auto Enrolment Report will show them as a postponed eligible worker.

 


 After the payroll has been updated the worker will have Auto enrol status EJ postponed with a 3 month deferral date.

 


Accord Pension Auto Enrolment Process

 

Entry of Starters

Accord will automatically defer new starters for up to 3 months setting status postponed on the employee record on the first assessment according to postponement period parameters defined on the Auto-enrolment Parameters screen.

 The AE Pension report for starters in the sample below shows that the system has postponed each worker for up to 3 months e.g. a worker that has started mid-month will have the same deferral date as a worker that started at the beginning of the month. The deferral date will always be set to the beginning of the last payroll period that falls in the 3 month or 12 week period.

 

IMPORTANT: The AE Pension fields won’t be committed to the employee record until after the update step.

 

Import (or entry) of Opt Outs

The Opt Out / Refund wages type can be either be imported (often from a 3rd party pension system) or entered manually. The ‘Start Date’ field is used to specify the opt-out date.

The refund amount can either be calculated automatically or imported/enter on the transaction depending on the wage type configuration (configuration options)

If this wage type is used then the relevant Opt Out fields will be populated automatically on the Employee Tax/NIC/Pensions tab once the payroll is updated.

Additionally the AE Pension Scheme Leave Date will automatically be set so no more contributions will be taken

In the example below the Pension Refunds have been calculated automatically by Accord

 

After the calculation step the Opt Outs will show on the Pension Auto Enrolment Report


 On the Payslip the Refund will show as a ‘reverse’ deduction by default

The Employer refund can also optionally be show as seen below.

The Pension YTD figures will be adjusted automatically. By default the refunds will also be included to the period pension totals.

 

Once the payroll has been updated the Pension tab will be updated as shown

Auto enrol status set to Opted Out

Opt out date set

Opt out effective date set

Deferral Date to when the worker should be reassessed set

End date on the AE Pension Scheme set to prevent further contributions

 

Import (or entry) of Scheme Leavers

The Scheme Leaver wage type 529902 AE Scheme Leaver can be either be imported (often from a 3rd party pension system) or entered manually.  This should be used for workers that have missed the Opt-Out Window i.e. no pension refund is due. The ‘Start Date’ field is used to specify the scheme leaving date.

 

If this wage type is used then the relevant AE fields will be populated automatically on the Employee Pensions tab once the payroll is updated

Additionally the AE Pension Scheme Leave Date will automatically be set so no more contributions will be taken.

After the calculation step the Scheme leavers will show on the Pension Auto Enrolment Report

 

 

Once the payroll has been updated the Pension tab will be updated as shown below.

Auto enrol status set to Scheme Leaver

Opt out date set (this is scheme leaver date in this instance)

Opt out effective date set

Deferral Date to when the worker should be reassessed set

End date on the AE Pension Scheme set to prevent further contributions

 

Import (or entry) of Opt Ins / Scheme Joiners

 

The Opt-In or Scheme Joiner wage type 530001 AE Opt In / Scheme Joiner can either be imported or entered manually.

If this wage type is use then the relevant fields will be populated automatically on the Employee Pensions tab once the payroll is updated

In the example below the worker (classed as an NEJ) has opted into the AE scheme with EE and ER pension contributions.


 Once the payroll has been updated the Pension tab will be updated as shown

The Opt in status has been set to Opted in

The Opt in effective date has been set to 01/09/13

The AE Pension Scheme is showing with a start date of 01/09/13

 

NOTE: The AE status fields and worker types are unaffected by this transaction


 For a worker with earnings below the LEL (example shown below) the employee will be classed as an entitled worker joining the scheme with contributions calculated on all QE and no employer contributions

 

 

Once the payroll has been updated the Pension tab will be updated as shown

The Opt in status has been set to Joined default AE Scheme

The Opt in effective date has been set to 01/09/13

The AE Pension Scheme is showing with a start date of 01/09/13.

 

NOTE: The AE status fields and worker types are unaffected by this transaction

Payroll Calculation (Pre Update or Trial AE Assessment)

The Accord Payroll calculation step will perform all assessments based on current qualifying earnings. The employee query can be used to determine if an employee will be auto-enrolled on a the AE Pension Scheme

IMPORTANT: At this stage the pension scheme or AE status and AE date won’t be committed to the employee record. This happen on payroll update when the final calculations are committed to the history tables. Although on the employee query the worker has been categorised and enrolled to the AE Pension scheme the changes won’t be seen on the employee record at this stage

Employee AE Fields (Pre Update)

 

Employee AE Fields (Post Update)

The system has set the following fields

Auto enrol status
Assessment Date
Auto enrol date
Worker Type
AE Pension Scheme 5 including EE %, ER % and start date

 

Pension AE (Pre Update) Assessment Report

All AE assessment results can be viewed by running the AE report from menu option Calculation | Print Payslips & Pre Update Reports | From Per Accum. | Pension Auto Enrolment Report.

The report will show the AE status of all employees in the calculation run i.e.

Auto enrolled
Worker postponement
EJ postponement
Opted Out
To be reassessed
Over 74 years old

The worker type (AE category) will also be shown i.e. Eligible Job Holder, Non-Eligible Job Holder or Entitled Worker

This report will be refreshed on each payroll calculation

 

  Accord Payroll Process Step AE Process Notes
1 Entry of Starters Accord will automatically defer new starters for up to 3 months setting status Postponed on the Employee Record on the first assessment  
2 Import of Opt Outs Sets Opt Out Status & Date and Calculates Pension Refund (Opt out wage types 529900 and 529901) Menu option Utilities | Import Data, NEST Opt Out Import
3 Entry of Scheme Leavers Use Scheme Leaver wage type 529902  
4 Entry of Opt Ins / Scheme Joiners Use Opt In / Scheme Joiner wage type 530001  
5 Payroll Calculation Assessment of all employees & assigning AE Pension Scheme to EJs  
6 Review AE Assessment Results   Menu option Calculation | Print Payslips & Pre Update Reports | From Per Accum. | Pension Auto Enrolment Report.
7 Payroll Update Committing all AE results to AE history tables. Updating all employee records with changed to AE fields and Pension details  
8 Export AE Assessment to 3rd Party HR System including Pension Schemes & Contribution Detail    
9 Export Worker Details to 3rd Party Pension Provider e.g. NEST   PA Export e.g. NEST Contribution Details Export (Post Update)
10 Export Pension Contribution Details to 3rd Party Pension Provider e.g. NEST   PA Export e.g. NEST Contribution Details Export (Post Update)

 

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