SMEs blissfully unaware of what pension changes may bring
The start of October marked the 1-year anniversary of the introduction of pension auto-enforcement rules, which will see many SMEs signing their employees up to pension schemes.
However, a recent survey which was carried out for employee benefits advice company Secondsight discovered that one third of SMEs were planning to ignore the new rules.
Furthermore, two thirds of SMEs who were questioned said they either had little knowledge of the new legislation or did not know about it at all.
From next year, approximately 38,000 companies who employ between 50 and 250 people will be fined £2,500 per day if they fail to comply.
Matthew Mitten, partner at Secondsight, expressed his shock at the survey’s findings but said there was still time for many SMEs to plan ahead.
“We were very surprised to see the statistic on the number of companies that will refuse to comply,” he said.
“Of course not all non-compliant SMEs next year will receive an escalating penalty and the reality is that most still have enough time to plan, but the figure we quote clearly demonstrates the lack of awareness around the fines and the enormous impact they could have on SMEs.
“Equally the lack of knowledge about the new rules and the timescales involved is a serious issue that needs to be resolved.”
Further research from Sage discovered that two thirds of firms do not currently have a scheme in place, while more than half expect the changes to impact their payroll, an area where companies need to be fully up to speed.
Moreover, 20% anticipate that the new rules will result in cash-flow problems for one reason or another.
Jonathan Dowden, Sage UK pension expert, said: “The real challenge is getting the tens of thousands of businesses who are yet to address this area, up to speed and compliant.
"It is imperative they understand the need to build in increasingly larger amounts of contributions for their employees into financial forecasts to 2018 and beyond.”
By Phil Smith