Auto-enrolment still a concern for many smaller SMEs
The government announced that it was launching pension Auto-Enrolment over a year ago. However, it seems there is still a critical lack of understanding and preparation in place.
The scheme is due to get underway during the next 12 months, with the staging dates for many smaller SMEs spread throughout 2014 and 2015.
But it could be argued that the vast majority of business owners are unprepared for AE, while half of those questioned did not even understand what it is, according to research from Clifton Wealth.
Firms can always turn to business rescue and advice companies for information on this topic, but it is perhaps alarming that so few companies are carrying out any research themselves.
Of equal concern will be the news that 82% of those asked did not know the “ball-park” cost of AE to their companies.
Communication in question
Critics have argued that it has not been effectively communicated since the launch, and have called for the Department for Work and Pensions, the Pensions Regulator and those in the financial and business advisory community to do more.
The research found that 90% of small businesses had not begun preparations for AE, especially as a result of recent news detailing the difficulties faced by many pension providers.
Many pension providers have said they will not accept any AE business from new or existing customers unless rigorous criteria are met, and without a minimum of six months notice.
The staging dates for companies falling into the 62-89, 90-159 and 160-249 staff categories all fall within the six month period between now and July 2014.
Those with fewer than 62 staff members must therefore begin preparations soon if they are to fulfill the stringent criteria of the pension providers.
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, our research has shocked us in terms of just how serious the situation actually is.
“With more than 95 per cent of the UK’s business economy comprising of SMEs, many with fewer than 50 employees and staging dates starting from April 2015, capacity issues are of great concern.”
By Phil Smith