By Hannah English, Head of DC Corporate Consulting, Hymans Robertson
Why pension mistakes happen
Contribution errors rarely come from one big failure. They develop quietly as rules, systems and policies move at different speeds. Common issues include:
pay used for calculating pension contributions gradually drifting away from what’s written in contracts or benefit guides
contribution rates not updating when employees reach age or service milestones
mismatches in employer matching rules across different employee groups
tax relief and salary sacrifice processes falling out of sync
pension calculations during leave periods not reflecting the correct definition of pay
salary sacrifice taking employees close to, or below, the legal minimum wage
Each issue may seem small. The real risk is when one error triggers another and the organisation doesn’t spot the pattern early enough. This can lead to breaching minimum wage rules, paying the wrong pension amounts for months at a time, or creating discrepancies that could be challenged legally.
Why this matters now
Auto-enrolment added another layer of complexity back in 2012. Many employers have adapted processes since then, but recent changes to benefits and rising minimum wage levels have created new pressure points.
When payroll and HR systems don’t align perfectly, pension contributions can be wrong for long periods without anyone noticing. This affects people directly and can quickly undermine trust. In a climate where employees are paying more attention to their workplace benefits, mistakes carry reputational risk as well as financial cost.
What can employers do?
A surface-level check isn’t enough anymore. Employers need a full, organisation-wide review of pension processes to understand how policies work in practice. This means:
reviewing the pay definitions used for contributions
checking how contribution changes are triggered and applied
mapping where salary sacrifice interacts with minimum wage thresholds
confirming that payroll and HR systems are aligned and updated consistently
understanding any legacy rules that might be creating discrepancies
Taking action now protects employees and reduces the risk of fines, compliance breaches and legal challenges. It also helps employers build confidence that their arrangements are robust and ready for future regulatory change.
If you have any questions on anything covered in this blog or would like to discuss further, please get in touch.
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