Small Businesses Unprepared for Auto-Enrolment Pension Scheme
Half of small and medium firms anxious about set-up and long-term costs of pension scheme
A new survey has revealed that although small businesses are concerned about the costs that the automatic-enrolment pension scheme will entail, 77% have not begun to prepare their company for it.
The survey, conducted by HW Fisher & Company, demonstrated widespread confusion and concern among small and medium-sized businesses. 62% were worried about the long-term costs staff pensions will cause, with 30% of the correspondents apprehensive about initial set-up cost, and 47% concerned about extra administration needed to manage the scheme.
Despite apprehension, many companies are failing to prepare for auto-enrolment with many of those surveyed unable to predict how the scheme would affect their business. 49% stated that they know “little or nothing” about what changes the scheme would entail, with 67% of the companies interviewed unaware of their business’ staging date.
The auto-enrolment scheme means that all UK employers that meet a certain criteria have to enrol their staff in a workplace pension scheme once their unique staging date begins, with smaller businesses starting at a later date than large ones. 1.3 million small and medium businesses will be affected and companies could face penalties if they fail to comply.
Sailesh Mehta, partner at HW Fisher & Company, emphasised the importance of planning for the scheme now:
“Choosing an auto-enrolment scheme and bedding it in can take several months, and you should get expert financial advice to help you pick the right scheme for your company.
“It’s equally important that you plan for how you will meet the extra cost of making pension contributions for your staff. By 2018 employers will have to pay at least 3% of basic pay per employee into a pension scheme. But the pension contributions you make will also lower your National Insurance bill – so it’s essential that you seek advice in order to budget accurately.”
For further information check out our sister site Startups.co.uk’s small business pension guide.