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Dunelm highlights need to focus on pension auto-enrolment

28th April, 2014

Leicestershire retailer Dunelm is the first business to have faced action by The Pension Regulator for failing to meet its pension auto-enrolment deadline. Chloe Hughes of Nottingham payroll and auto-enrolment specialists Clayton & Brewill looks at what went wrong and the lessons to be learned by smaller businesses.

Dunelm employs 4,500 staff, bringing it into one of the earlier waves of auto-enrolment staging dates. The retailer missed their 31 July staging date deadline, eventually registering on 15 August 2013 – by which time they had underpaid £143,000 in employee pension contributions.

Under the auto-enrolment rules, which are designed to boost the number of people saving for their retirement, all companies with staff in the UK must place their eligible workers into a workplace pension scheme. Businesses also need to register with The Pensions Regulator.

The report from the Pension Regulator highlighted 3 key reasons why Dunelm failed to meet the auto-enrolment deadlines:

1) Dunelm’s bespoke payroll system was not geared up to cope with the auto-enrolment processes.

2) Key members of staff responsible for the auto-enrolment project left at a critical stage.

3) Employee data was poor quality.

So what could they have done differently?

1) Clayton & Brewill recommends that businesses undertake a dummy auto-enrolment run on their payroll systems at least a month before staging date. This can help you to identify and iron out any problems. In addition to this, ensure you run a parallel pay run the first time you stage – just in case any problems arise.

2) Pension auto-enrolment can’t be left to chance. It’s essential to have a dedicated project team with a senior member of staff (preferably director level) who is fully briefed and with a clear understanding of the project so that in the event of an untimely departure there can be a smooth handover.

3) Put rubbish in – get rubbish out! Data is difficult, we all know that. But it is essential to invest the time into ensuring your employee data is top quality. You need to be able to easily capture detail such as date of birth, hours worked, and preferred communication methods. And don’t forget about employees on maternity leave, long-term sick or far-flung sites!

Pension auto-enrolment is not going away and over the next two years it will affect the majority of mid sized and smaller businesses. Our experience has shown that you need a minimum of 12 months to prepare – and preferably 18 months if you want to have a choice of pension scheme. You can find out your staging date here.

Auto-enrolment and payroll advice

For help and advice with planning for pension auto-enrolment and its impact on your payroll systems please contact Chloe Hughes on 0115 950 3044 or by email.

You can also read the Clayton & Brewill guide ‘13 top tips for preparing for pension auto-enrolment.’

auto-enrolment infographic
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