There have been reports that more than a million small and micro-sized businesses in the UK will need to provide auto-enrolment for workplace pensions within the next two years. However, surveys have revealed that of the companies who haven’t already put these provisions in place, up to 45 per cent claim they do not fully understand the enrolment rules and a further 25 per cent admitted they do not know where to start.
Compliance costs causing concerns
The pension changes themselves were initially created to provide an increased sense of stability and financial security for workers. This also partly stemmed from the fact that for many years, working-age people had voiced concerns about not being financially prepared for retirement. In addition to this, the State Pension age is also continuing to rise and as such it can make it difficult to predict what the future holds.
A key aim of ensuring that all workers are offered a pension scheme and are automatically provided with one, is to help deal with this situation. However, while employees can opt out of contributing to their pensions after being automatically enrolled, businesses are not able to opt out of providing them. They also must comply with the new rules as long as they have one or more employees over the age of 22 with a salary over £10,000 per year.
While this may be positive news for employees, the fact that it can cost businesses money to implement them and that they must be undertaken no matter how big or small the company, there have been some concerns from micro and small business owners – with 76 per cent claiming it puts significant financial pressure on them. Non-compliance, however, could lead to penalties and fines being enforced on companies who don’t meet the new regulations.
What should small business owners do?
With all this, it would seem that smart course of action for small business owners who are unsure about, or have reservations regarding auto-enrolment in their companies, should be looking to seek professional help. This is all while there is still time and the opportunity to get these processes sorted and moving.
The fact remains that as it is mandatory, business owners will need to have this in place as soon as they can. Online resources like this from the UK government, or indeed advice from a financial expert like Tilney for instance could also be useful in helping a business to get their pensions and money in order.
Source: Ben Lobel - Smallbusiness.co.uk