Time for a Pension Review?

You wouldn’t be at all surprised by an advert suggesting that employees should review their pension arrangements every few years, but exactly the same comment applies to payroll, and especially to payroll’s processing of pension contributions.

Over the years there have been many changes to the legislation for pensions in the UK and employers are at risk of being pulled up by their auditors, pension scheme trustees or potentially being named and shamed by The Pensions Regulator if they are not operating their pension schemes in a compliant manner. Aside from the public perception, brand impact or your company’s reputation, there is nothing more dis-heartening for an employee than finding an issue with their remuneration.

Legislation will vary by country, but here in the UK in recent years, here are just a few examples that since you originally configured your payroll, you might want to check you are still compliant:

• Using full pay for employer’s pension contributions whilst an employee is in receipt of statutory absence (Statutory Sick Pay - SSP, Statutory Maternity Pay - SMP, Statutory Adoption Pay - SAP and Statutory Paternity Pay - SPP), to the requirement for PAE assessments to be on a ‘When Earned’ basis.
• Check ad hoc payment configuration to ensure it is relevant for employer’s pensionable pay and correctly prorated.
• Have any new wage types for new payments (regular or ad hoc) or salary sacrifice arrangements remained compliant in all pension aspects?
• What has your software provider changed in recent years? For example, in April 2020 and April 2021, SAP enforced functionality (GBCHG nodes) was activated.
• Are pension “splits” fully active to ensure that for example when an employee drops from receiving Statutory Maternity Pay (SMP) to nil pay mid-period, you do not needlessly pay employer’s pension contributions on the employee’s full pay for the entire period?
• Are your pension schemes with pensionable pay based on NI-able earnings? Qualifying pension schemes must pay contributions which meet or exceed the prescribed percentage of NI-able earnings. If any other definition of pensionable pay is used, the contributions must never fall below the prescribed percentage of NI-able earnings or else the scheme will be non-compliant.
• Is your pension scheme running on a ‘When Earned’ as opposed to a ‘When Paid’ basis, and do your pension scheme trustees even want you to be doing so? Historically, it is worth noting that all pension schemes operate on a ‘When Earned’ basis in SAP.

At Zalaris, our business is built on payroll, and we have over 20 years of experience in Payroll and SAP technologies. Our dedicated UK based support team support dozens of customers on SAP Payroll, providing support for our customers to meet their business requirements and to ensure they remain compliant.

Our consultants have SAP experience averaging 19 years and have typically been with Zalaris for over 8 years, so they are well positioned to answer specific questions. Or we can conduct a more far-reaching review of your current pension configuration and discuss any remediation work that could be required.

If you would like a payroll pensions review or a full payroll review, then please contact us.