The Pension Regulator (TPR) recently announced a change to pension monitoring affecting UK workplace pensions. As of May 2024, employers must submit information on pensionable earnings alongside the monthly data they already provide.
Though the rule will not become mandatory until the Spring, pension providers recommend that employers embrace the change early and start including pensionable earnings as soon as possible.
Submitting pensionable earnings in payroll files
Employers and pension providers are obligated to monitor contributions made into workplace pension schemes. To ensure accuracy, alignment with contractual obligations, and timely payment, each month, submitted payroll files must include information on contribution amounts and the due date for payments.
However, as of May 2024, employers and providers must also provide details regarding each worker’s pensionable earnings. This figure can be banded or unbanded, where unbanded refers to the employee’s total gross pay minus expenses (gross qualifying earnings), and banded refers to the worker’s pay after standardised salary thresholds have been applied.
Complying with the new TPR rule on pensionable earnings
As of May 2024, each contribution submitted via payroll files must be accompanied by pensionable earnings information. This data should be included under the new “Earnings in Current Contribution Period (£)” column, which many pension providers have already added to their online submission forms. Non-compliance with the new rule will lead to requests from TPR to respond and provide the necessary information within 90 days, and if this time lapses without a response, this may result in a fine.
For those who use an automatic enrolment dashboard, when you select “Make Contributions”, a reminder will likely pop up to remind you of the new rule and encourage you to submit the newly required information. If you use an external payroll provider or independent auditor, these specialists will likely be aware of the changes. However, it is still worth having a conversation with them to ensure they include the necessary information in any payroll files they submit on your behalf.
Which pension schemes are subject to the changes?
TPR’s new rule affects all occupational and contract-based pension schemes. Although this is not mandatory until May 2024, pension providers strongly recommend that those who submit payroll information via an online portal should start submitting this new data now to get into the habit before it becomes mandatory.
Employers who use salary exchange for their workplace pension schemes are also required to submit this new information and should provide the worker’s pre-salary exchange pensionable earnings. However, employers and providers who use Phoenix or ReAssure will not be affected by the upcoming changes, as both systems already have sufficient pension monitoring processes. It should also be noted that providers are currently prioritising those who pay online through Group Pension Zone and Workplace Hub.
Ensuring effective pension monitoring
Though guidance is available to help ease you into the new changes, it is ultimately up to pension trustees to ensure adequate pension monitoring. Therefore, ensuring your workplace pension is set up correctly and effective processes are implemented is essential.
If you need help with this, our pension experts are on hand to address specific concerns about your pension setup and guide you through the steps required to optimise your pension processes. Providing the necessary experience and up-to-the-minute knowledge of the latest TPR requirements, we provide you with impartial advice that will ensure your compliance with regulations and improve outcomes for your scheme members.
Get in touch with us today to arrange a no-obligation consultation.