More SMEs sign up to auto-enrolment scheme » SMEInsider

More SMEs sign up to auto-enrolment scheme

The government is edging ever closer to the completion of its auto-enrolment initiative, with today marking the staging date for companies with 30 to 49 employees to enrol staff on a workplace pension scheme.


Workplace pensions

On January 5th 2012, the coalition government published a renewed timetable of its plans to have employers of all sizes enrolling their staff into a retirement package.

Created by the Department for Work and Pensions, the programme also gives staff the option to leave the scheme or stop paying contributions, but companies of all sizes must enrol eligible employees.

Employers don’t have to sign up to the service all at once. Staging dates are based on the employer size of UK businesses.




















The Pensions Regulator says that it contacts all companies 12 months before their due date to let them know what is expected of them, giving SME owners enough time to complete the necessary paperwork.

In October 2012, companies that held 250+ employees were the first to be asked to sign up to the scheme.

At the time of publishing the new rules, minister for pensions Steve Webb said ‘‘we have done all we can to ease any burden on business the reforms will bring and employers of all sizes now know the date they need to start enrolling their staff.’’


SMEs have struggled

Despite the added support from the government, SMEs have found difficulty with the auto-enrolment process.

Last year, a report from Barclays Corporate and Employer Solutions found that a third of all small business owners who had yet to register their employers were not ready for the new pension rules.

The report found that 73 per cent of SME leaders have set-up or researched pension provision themselves, despite being advised to seek professional help if they are struggling.

Moorepay, a HR and payroll specialist, predicts that a large percentage of SMEs will miss today’s staging date, with the firm going as far as claiming that a quarter of SMEs with less than 50 employees are either unaware or unclear of their pension responsibilities.

SME Insider spoke to Moorepay CEO Alison Dodd, who strongly believes that SMEs are struggling to cope with the auto-enrolment process.

‘‘Auto-enrolment is a very new thing for all companies and we saw the same issue with large business owners coming to terms with it early on in the staging process, and they have a lot more resources at their disposal.’’

Dodd has witnessed first-hand the extent to which small businesses owners are failing to cope with completing the documentation.

‘‘I think SME owners suffer with a lack of understanding and a lack of time in getting all the necessary steps in place and meeting their staging date.’’

One of the reasons as to why so many SME owners have failed to submit their auto-enrolment forms in on time is because they have never come across a process similar to this.

‘‘Auto-enrolment is asking small and medium-sized business owners to do something they have never considered to do in the past.’’

‘‘According to market research, one in five SME owners stay up at night worrying about a number of issues, including staff retention. Now they are being asked to think about the welfare of their staff, so it forces them into a different mind-set which has clearly affected some people.’’


‘Battle between perception and reality’

A number of SME owners believe that auto-enrolment brings with it lots of red tape, but this is a myth that Dodd is happy to dismiss.

‘‘The real challenge of auto-enrolment is the battle between perception and reality. SME owners believe that it’s a lot of hard work, but the process can be completed in five easy steps – it’s just about finding the time and support to complete these steps.’’

Simon Alsop, head of business at the Institute of Chartered Accountants in England and Wales (ICAEW), one of the UK’s largest professional membership organisations, feels that SME owners need to have more support with auto-enrolment due to their severe lack of resources.

‘‘With the Auto Enrolment staging date for companies with 30-49 employees coming into effect today, the main concern is the impact this will have on small businesses that have proportionately less resource to help than larger firms.’’

‘‘While we support Auto Enrolment, and employers will be keen to do the right thing for their employees, there is a worry that this could become a regulatory and administrative burden which will be costly to implement.’’