Speaking at the Work and Pensions Committee this morning (24 February), FSB policy director Mike Cherry said that the planned review of the automatic enrolment, which was set for 2017, should be delayed in line with other aspects of the scheme.
Too much, too soon
SMEs will have to sign up for auto-enrolment this year, with a review of the process scheduled for next year.
But an increase in minimum contributions from 2 to 5 per cent, originally set for October 2017, has been delayed to April 2018, and a subsequent rise from 5 to 8 per cent pushed back from October 2018 to April 2019.
A review of the effects of the process should therefore also be delayed, to fully account for what is involved and the impact on small businesses, Cherry argued.
“Given that things have been pushed back a little, our concern is that review may not harness some of the issues that will come up when the vast majority of small businesses have to face auto-enrolment,” he said.
“And we would advocate that is delayed until you actually have enough evidence to understand what any subsequent issues may be over the next 12 to 18 months.”
Auto-enrolment will coincide with other changes being imposed on small firms, which will leave many struggling, Cherry added.
“The vast rump of businesses in the UK are now facing auto-enrolment. There are other challenges facing them around the national living wage and changes to dividends coming through in April.
“It is all coming at the same time and that is not helpful. This was one of our real concerns – that if everything did clash… at the same time auto-enrolment came in, it would prove a massive challenge to the majority of small businesses.”