The modern business community has never been hit in a single blow by a government regulation as far reaching as the auto-enrolment workplace pension scheme. As the biggest shake-up to the system sweeps across the UK, almost 45% of UK small businesses remain confused about auto-enrolment rules that oblige them to enrol employees in a qualifying pension scheme.
That’s according to a study by the FSB which says that 75% of small businesses surveyed fear the regulations would put too much pressure on them; while 25% feel their business might not cope with the added financial demands.
These statistics have been released just as a tidal wave of auto-enrolment activities hit the business community across the UK. More than 1,000 small businesses have already been hit with fines for missing their deadline.
500,000 small businesses expected to set-up a pension scheme this year
This year more than half a million small businesses are expected to set up a workplace pension arrangement for their employees, in a series of stages. The first of those involves 100,000 small businesses that have until the end of March to get things sorted. Fines for non-compliance start with a ticket from the Pensions Regulator for £400, followed by compound fines that can amount to as much as £500 per day for small businesses.
Lack of awareness and resources
According to Graham Robinson of the Auto Enrolment Advisor, a majority of micro, small and medium sized businesses have low awareness of their auto-enrolment duties due to their size.
“They don’t have in-house human resources departments to manage the process, like many of the early employers who met their obligations. So to negate this, early preparation is critical. Added to this, the first employers to tackle auto-enrolment in 2012 will be the first to implement re-enrolment, which may put further strain on the administration process of the providers,” said Robinson.
The auto-enrolment ‘tsunami’ – as dubbed by experts – has started, but thorough preparation and a rapid response can help avoid the fines. Our advice to small and medium businesses is to seek proper advice and start the necessary processes as soon as possible.