Frequently asked questions about Contribution Monitoring

23 January 2024
If you're looking for more information about the changes being made to how we monitor contributions, our Frequently Asked Questions may have the answer you're looking for.

Changes do not need to be made to how you calculate pensionable earnings, we simply require you to add the earnings figure to the contribution file.

Why is Contribution Monitoring changing?

The Pensions Regulator (TPR) has instructed pension providers – like Royal London – to ensure their processes for monitoring contribution compliance is reviewed and updated to reflect their focus on driving good member outcomes. Royal London requires the additional information to ensure we can meet our duty to monitor the payment of contributions into the scheme and identify underpayments or overpayments as well as non-payments.

Royal London will be monitoring the contribution amounts submitted by employers, and checking if these match the contribution amounts Royal London expect.  This is based on the contribution rates Royal London hold and the pensionable “earnings in the current contribution period” the employer includes in the contribution submission.

 All occupational and contract-based workplace pension schemes are affected by these changes, with an initial focus on schemes that submit their contributions online via our Automatic Enrolment Dashboard.

Yes – this is a minimum required standard and TPR expect Royal London to fulfil our monitoring responsibilities.

We have a duty to report any employers that fail to comply with the requirements to TPR. At this point, it’s TPR’s decision whether to impose any fines on the employer.

What will I have to do differently?

If you already provide pensionable earnings in your existing contribution template then no change will be required.  If you don’t, you’ll need to update your template to include this information accordingly.

-Example of RGP and SHR scheme contribution template can be downloaded here

-Example of CMP scheme contribution template can be downloaded here.

The example contribution templates correspond with the prefix of your scheme number which can be located at the top right corner of Dashboard or via our online services.

Yes, you can start updating your files and providing pensionable earnings for your workers to us, any time before May 2024 and we’d recommend that you don’t wait until May 2024 to start providing this information.

 It is done the exact same way as you would normally do it now, there's no change to this process.

More information on this process can be found here.

Yes provided you input the workers’ pensionable earnings in the ‘Earnings in contribution period’ field when submitting your contribution manually.

What if there’s an error?

The contribution monitoring process will run alongside the normal contribution submission process. If contributions submitted are different from what Royal London expect based on the information the employer has provided to Royal London, a contribution mismatch will be flagged to the employer.  The employer can review/update the details they’ve entered on the schedule if an error has been made; or will be asked to pick a reason from a dropdown list if there is a genuine mismatch.

Employers will need to either review and update the pensionable earnings and or contribution amounts they are submitting or select a reason for any genuine mismatches before they can submit the contribution schedule.  

What happens if I don’t make changes?

No, this is a valid reason for underpaying and Royal London are not required to report these instances.

We currently use an online portal for reporting non-payments. We’ll work with TPR to agree the approach for reporting on contribution monitoring.

If an employer is unable to supply the required information as part of their monthly contribution schedule, they’ll not be able to submit their schedule. This can result in the employer being reported to TPR for missed contributions.

What do I do if?

If the definition of pensionable pay is qualifying earnings, you’ll need to exclude earnings below the lower earnings limit, and where relevant not include any earnings above the upper earnings limit. 

For members that have a fixed contribution/sum paid for them each month, the validation check will be on the fixed amount paid compared to the fixed amount we are expecting.  However, we would still expect if they had earnings in the contribution period, that’s entered. 

There is one field for earnings in current contribution period so we cannot capture two different earnings.  You should include actual pensionable earnings.  If a payment mismatch validation occurs, there is a Maternity/Paternity Leave dropdown reason to let us know this is the reason why.

If you have amended the headings of your contribution template then you will require to create a new template. The process to do this is outlined within the attached user guide and following templates:

How do I?

Call or email your Servicing Team via the contact us link on the top right of the Automatic Enrolment Dashboard and we can delete them for you.

There is a link called Contact Us in the top right-hand corner of the Automatic Enrolment Dashboard.

Click on the link in the top right-hand corner of the Automatic Enrolment Dashboard which says contact us and fill in the form.

Click on the link in the top right-hand corner of the Automatic Enrolment Dashboard which says contact us and fill in the form.

You can check the information we hold by requesting a bulk data extract from your Corporate Servicing Team.

You can do this one of two ways, either contact your Corporate Service team via ‘contact us’ at the top right of Automatic Enrolment Dashboard or you can chose the member from our online service and then select change details.

Salary exchange

Salary exchange is sometimes referred to as salary sacrifice. Put simply, it’s an agreement between you and your employees, where they agree to exchange part of their gross salary, bonus or even redundancy package for a pension contribution. It works in a similar way as other salary related benefit schemes, for example company car, cycle to work and childcare voucher schemes. 

For worker’s using salary exchange the Dashboard checks that the contribution was being received as an employer only contribution and produce a validation if a worker contribution amount was listed in the upload.

The validation checks are being enhanced and once delivered Dashboard will also validate that the salary exchange contribution amount received is in line with the contribution amount that we are expecting. If this differs you will be asked to provide a reason as to why.

The earnings figure we will require to be input is the worker’s pensionable earnings figure that the pension contribution % has been calculated from.  The Dashboard will take the pensionable earnings figure provided and apply the contribution % held on our records to calculate the contribution amount we are expecting to receive. 

The earnings figure we will require to be input is the worker’s pensionable earnings figure that the pension contribution % has been calculated from. If a salary exchange agreement is written in a way that a worker’s:

  • Pension contribution is calculated based on the pensionable pay prior to any other salary exchange deductions then we require the pensionable earnings figure pre other salary exchange deductions.
  • Pensionable pay is reduced because of other salary exchange deductions and as a result their pension contribution reduces then we would require the pensionable earnings figure after the other salary exchange deductions.

The Dashboard will take the pensionable earnings figure provided then apply the contribution %’s we have on our records to calculate the contribution amount that we would ordinarily expect.

Contact your Servicing Team, their contact details can be located by selecting ‘contact us’ at the top right corner of Dashboard. 

Contact your Servicing Team, their contact details can be located by selecting ‘contact us’ at the top right corner of Dashboard.

Contact your Servicing Team, their contact details can be located by selecting ‘contact us’ at the top right corner of Dashboard.  You may also require to review and / or update the salary exchange agreements you have in place and you should seek your own advice in this regard.

Contact your Servicing Team, their contact details can be located by selecting ‘contact us’ at the top right corner of Dashboard.

Before setting up a salary exchange arrangement, it’s important to make sure you’ve got everything in place that’s needed. This includes making amends to employees’ contracts of employment so they meet legal requirements. As this is a matter of employment law, you should speak to your legal advisers.

Any contribution deducted via salary exchange should be combined with the employer contribution amount when submitting a contribution to Dashboard to avoid the worker erroneously receiving duplicate tax relief.  

You should combine the exchanged bonus / redundancy payment with the worker’s monthly contribution upload as an increased employer contribution amount.  You will receive a mismatch validation upon submission where you can select the appropriate reason for the mismatch. 

Additional information about salary exchange can be found in the following guides:

Others

No – as this is a minimum standard requirement set out by TPR, all employers are required to provide this information to their pension provider.

The information we require is a worker’s pensionable earnings for the relevant contribution period. This should be the earnings that you’ve used to calculate the pension contribution based on your scheme’s definition of pensionable pay.  If the definition of pensionable pay is qualifying earnings, you’ll need to exclude earnings below the lower earnings limit, and where relevant not include any earnings above the upper earnings limit.   If using salary exchange for pension contributions, you’ll need to provide us with the worker’s pre salary exchange pensionable earnings.