In less than 6 months a number of the 56,000 small and medium businesses in Kent, ie, those with 50 to 249 employees, will have to comply with workplace pension auto enrolment for their staff. And if you are one of these businesses that hasn’t taken any steps to deal with the issue, you need to act now.
Research carried out last month suggests that the vast majority of small business owners are not prepared for auto enrolment and have no idea of the cost involved to their business. To make matters worse, half of those surveyed don’t even understand the concept of pension auto enrolment at all.
The study, undertaken on SME owners in October 2013 by Clifton Wealth, puts the spotlight on the lack of understanding of pension auto-enrolment amongst SME owners, despite the government initiative being in place for more than a year now.
What is auto-enrolment (AE)? According to a government department website, it’s a new law that demands every employer to automatically enrol eligible workers into a workplace pension scheme if they are aged between 22 and State Pension age or earn more than £9,440 a year and work in the UK. If you are self employed or the sole director of your own company, you won’t be automatically enrolled into a workplace pension.
Close to half of the respondents surveyed said that they did not understand what AE is, while 82% of the business owners accepted that they were not aware of the “ball-park” cost of AE for their companies. And what’s even more worrying is the fact that 80% of small and medium businesses were unaware that they’d need to re-register employees who opt out every three years.
Anthony Carty, group financial planning director of Clifton Wealth, said: “We have been warning SME owners for some time that AE is not something that can be ignored and requires planning, however, whereas the employee message seems to have got through – with a 90% opt-in rate – the employer message has proved more difficult.”
Over 99% of the UK’s businesses are SMEs and many will face staging dates starting in April 2015, causing concern amongst the accounting profession that they will simply be overwhelmed by requests for help.
Backing up Anthony’s comment, Charles Counsell, executive director of automatic enrolment, says, “The six-month countdown for medium-sized employers has begun and we are calling them to action.” The Pensions Regulator provides companies with a qualifying schemes tool to assist employers in finding out whether their existing scheme can continue to be used. You can check if the new law applies to you and whether you will be automatically enrolled by following the link. The Pensions Regulator has recommended employers who are due to comply in April 2014 should find a suitable pension provider and software provider as well as any outside help they may need.
Along with helping you create a customised Pension Scheme, Bradleys Accountants can check which of your workers will need to automatically enrol and even communicate with them about the changes. The scheme offers a host of features and benefits for small businesses that are normally only available for larger organisations. Act now and be prepared.