Automatic enrolment (AE) has been with us for a while.

Now all new employers are required to enrol their staff from the first day of employment. There are further changes being discussed that would add to the workload of the bookkeeper and the payroll cost of the employer. So here are tips on how to cope today, and how to impress your employer now, and in the future.

Current situation

At present there are earnings and age triggers. Those between the ages of 22 and 74, and earning a minimum of £10.000 are automatically enrolled. Total contributions to be paid into the pension amount to 3%, with the employer paying a minimum of 1% and the employee making up the difference.

Future situations

From April 2018 the contributions increase to 5%, with a minimum of 2% from the employer, and the difference made up by the employee. April 2019 will herald a further increase in total contributions to 8% with the employer paying in a minimum of 3% and the employee making up the difference.

Managing the whole process can be time-consuming so identifying some of the more important tasks should help to focus activities.

Bookkeepers role

A bookkeeper who deals with payroll can find the job a busy one. There are many employees, forms and rules to monitor. As AE is dependent on age and earnings it’s imperative to monitor the situation every pay period. For those bookkeepers who have just started the AE process on behalf of their clients, and for bookkeepers who currently perform AE duties, here are just some of the tasks that need regular processing.

Data checks

Information on all new starters, leavers, and employees with significant age and earnings will need to be received from the employer in time for processing in the relevant pay period.

The information will need to be communicated in an environment that minimises the chance of a data leak. This is to conform to the GDPR and the Data Protection Act (DPA) 2018. The new DPA may not be in force yet, but it is good practice to be prepared and train your employers now.

Monitoring staff details and pay may be easier for the in-house bookkeeper as no doubt they would be invited to a leaver’s farewell party, and be introduced to the new employee. A surfeit of cakes in the office could signify the occurrence of a colleague’s birthday, and dates of pay rises are usually known company-wide. All the in-house bookkeeper need do is get sight of the paperwork.

For the agent bookkeeper these triggers will be absent, and, as the agent is often located elsewhere, getting the information from the employer to agent can be problematic. To minimise problems of delayed and missed payments, set up an agreement that identifies ownership of duties and states the deadline by which they have to be completed. Ensure that the employer agrees and signs up to it. A regular prompt from the agent will help ‘poke’ the employer into action, but vary the style in which the prompts are delivered. If the same prompt arrives every time it will soon become ‘white noise’ and be ignored.

Be in the know

Knowing when staff are sick, or on child related statutory leave is also important as this may have a bearing on the pension contributions deducted. Both in-house and agent bookkeepers will need to keep copies of the documentation as confirmation of any change in deductions.

An in-house bookkeeper will have a natural advantage but for the agent who works away from that workplace the reliance on a dependable individual to provide the necessary information and documentation is crucial. Prompts and regular reminders from the agent to the organisation may be needed. The prompts could take the form of a checklist with questions relating to staff and instructions on what information and documentation to supply if any of the answers indicate an employee is absent due to sickness, or if an employee is soon to take a child related absence.

All the information and documentation received must be kept secure and compliant with the current and, from May 2018, the new DPA. Emailing information is not recommended. It is all too easy to send the information to the wrong person, leave an email open on the computer screen for all to see, or be subject to scam emails. One solution would be to have a shared area with the employer in the ‘cloud’. If this is chosen then enquiries need to be made as to the security of the chosen software. It is worthwhile remembering that hackers love a challenge so precautions are recommended.

Above are just some of the processes that can create a challenge for the bookkeeper and a few ideas on how to cope.

Future developments

The Pensions Policy Institute undertook independent research to investigate the potential impact of removing the earnings trigger and the lower earnings threshold. If this was to happen then:

• Three million workers would become eligible for AE, including individuals who work part time or have several part time jobs.
• Contributions would be increased as they would be based on total salary, not just salary above the lower earnings limit (LEL).

The above changes could only have a positive outcome for the individual and lead to greater comfort in retirement than is currently forecast. But conversely it could also mean that employers would have to contribute more. Only publication of the findings will tell.

After setting up procedures with the employer so that they conform to GDPR and build towards the new DPA, the next step would be to actively participate in the building of the budgets and cash flows for the next financial year. Remember, pension contributions increase from a minimum of 3% to 5%. This will need to be factored into the budget, whether the bookkeeper is in-house or an agent.

Julie Hodgskin is a fellow member of AAT, runs a licensed accounting practice and is a technical materials author for CIPP.