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.