Pension plan burden for payroll IT

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Pension plan burden for payroll IT

Christian Annesley

The national pensions scheme proposed by former CBI chief Lord Turner last week could, if adopted, raise anxiety in IT departments about how their payroll systems would cope.

Turner's report, A New Pensions Settlement for the 21st Century, recommended a three-pot pension system with employee, employer and government all contributing to an individual's pension.

It suggested the government create either a dedicated pensions payment system or that it collect contributions via the PAYE system.

A dedicated system would put a greater burden on businesses, since it would require employers to move to a system of monthly individual reporting of pensions contributions. Under PAYE, firms only report an individual's tax contributions on an annual basis.

Dennis Keeling, chief executive of the Business Application Software Developers Association, which represents many payroll system suppliers, said whichever way the government collected contributions, businesses would be able to adapt existing payroll systems relatively easily.

But Peter Horan, processes and systems principal at consultancy Mercer, warned businesses not to be complacent about the likely impact on systems.

"For firms' payroll systems, the Turner Report poses several questions but provides few answers. The devil will, as ever, be in the detail," he said.

"If the government follows Turner's lead, how it manages its contribution to the individual pension accounts is something firms will need to watch closely."


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