A sizeable proportion of small and medium enterprises (SMEs) continue to underrate the requirements of auto-enrolment pension laws. This is despite 6,000 businesses being less than 50 days away from their implementation date.
According to law firm, Irwin Mitchell, a large number of business owners are not aware of what they will be legally required to do. The firm was also concerned about the shortage of pension products for SMEs and the lack of availability of advice which could lead to hundreds missing the compliance deadline.
Nigel Bolton, of Irwin Mitchell, said: "We are pleased to say that many small and medium-sized businesses are ready, however we think that there are still many that do not fully appreciate what is involved and therefore will not be ready in time. Recent NEST research found that 20 per cent of businesses took 16 months in order to get ready for auto-enrolment. Although many of these organisations are much bigger than those that are yet to stage and have more employees to enrol, it should also be remembered that these larger companies have far bigger specialist support teams and functions.
"Although there is currently no online product which deals with all the issues associated with auto-enrolment, from providing the pension product to providing initial and follow-on legal compliance, we firmly believe it is clear that this is essential in ensuring smaller businesses deal effectively with this significant change to pension legislation."
For UK’s biggest firms, pension auto-enrolment legislation came in to force in 2012 and businesses with a PAYE scheme size of 249-160 employees will need to comply by April 2014.
While the staging dates for the smallest of businesses (fewer than 30 employees) is still not due till April 2016 onwards, all businesses with 90-160 employees and up are obliged to take part by July 2014. Businesses smaller than 50 employees don’t have to stage until after June 2015. If you know your PAYE scheme reference, visit The Pensions Regulator’s interactive staging date toolto look up your staging date.
Since auto-enrolment is not only an HR, payroll or pensions issue, we advise you to get a team together to deal with this. It could mean using a local small business accountant in conjunction with whatever support you have internally.