Pension auto-enrolment still a burden for many SMEs
Pension auto-enrolment is not far off for some medium-sized businesses, but the latest research suggests that many remain unprepared.
Some 58% of SMEs questioned as part of survey by AutoenrolSME are yet to set up a pension scheme to comply with the new legislation.
The rollout has been ongoing since October 2012 and began with the largest organisations before gradually reducing the sizes of the companies via a set of ‘staging dates’.
By each one of these dates, any employer with UK-based staff will need to automatically enroll anyone who is eligible into a workplace pension scheme.
In order to be eligible, staff must be aged between 22 and state pension age and earning above a set minimum amount.
The staging dates are based on payroll size and from April 1 2014 to April 1 2015, employers with between 50 and 249 staff on their largest PAYE scheme will need to register.
Companies with fewer than 50 staff will need to register between April next year and April 1 2017 – the final date for staging.
For the survey, AutoenrolSME looked at 200 UK organisations with between 62 and 249 employees – all of which are about to enter their staging period.
Nearly two-thirds were unaware of when their staging date was and only 42% had some sort of pension scheme set up.
More worryingly, 90% of those without schemes said they had not even begun research into them, despite the penalties that could be applied.
The financial concerns could place great pressure on some companies, who will need to consider their options.
For those with concerns that it could make trading difficult, insolvency practitioners can provide useful advice.
Despite the seemingly long timescale before the end of the next staging date, the pensions market remains in business as many companies work towards setting up schemes – as a result, businesses are being encouraged to act early.
“It’s clearly a worry that so many UK employers are not ready and are unlikely to meet their legal obligations in providing a pension scheme for their employees,” said Rose Smith, marketing manager at AutoenrolSME.
By Phil Smith