A third of SMEs not ready for new pension rules » SMEInsider

A third of SMEs not ready for new pension rules

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As new pension legislation begins to affect the UK’s smallest companies, research shows one in three small and medium-sized enterprises (SMEs) is not prepared.

Under new auto-enrolment rules, all businesses must sign employees up to a pension scheme. Staff can choose to leave the scheme or stop paying contributions, but companies of all sizes must enrol eligible employees.

The policy began apply to businesses with 60 employees or more from October 1. From next summer to 2018, companies with 50 or fewer workers will need to have a pension scheme in place. Businesses that do not comply with the regulations can face fines of between £50 and £10,000 a day, depending on how many employees they have.

Research from Barclays Corporate and Employer Solutions, conducted by YouGov on Yorkshire-based companies, found 30 per cent of firms in the region yet to be affected have started making preparations.

Those who are taking steps to prepare have typically done it without professional help. Almost three quarters (73 per cent) of SME leaders have set-up or researched pension provision themselves, drawing on professional support when necessary.

Tracie Denson, employee benefits consultant at Barclays Corporate and Employer Solutions, said entrepreneurs and business owners in Yorkshire and Humber have confident decision-making, sound judgement and financial acumen behind their success.

“Nobody understands the business’ better than those who work within it,” she said. “That said, we have also seen how easy it is for businesses to underestimate complexity of auto-enrolment and the time it requires.”

At a national level, retail firms are twice as likely to have not addressed their pension situation than manufacturing companies (32 per cent and 15 per cent respectively).

IT and telecoms and finance and accounting were the most prepared sectors, with eight out of 10 leaders directing pension arrangements.

  • Matthew Mitten

    Matthew Mitten, director at Enrolsme – http://www.enrolsme.com

    Auto-enrolment is gathering momentum, and while thousands
    of larger businesses have already complied with the legislation, there are
    still many more that need to auto-enrol over the coming years. It is worrying
    to read the stats around the numbers that continue to bury their heads in the
    sand, particularly with the risk of fines and legal action being taken against
    them.

    The larger businesses tended to rely on support from
    benefits providers, as well as payroll, when it came to auto-enrolment.
    However, when it comes to the smaller organisations, there simply will not be
    the capacity in the market to provide support to the high numbers. This is
    where technology will prevail and companies will turn to online solutions to
    guide them through the auto-enrolment process. And whilst I believe many will
    attempt to undertake the process on their own, they are likely to struggle both
    when it comes to the time needed to dedicate to this, as well as the level of
    knowledge they will require.