Recently instated laws on pension auto-enrolment made it necessary for all UK employers to place their eligible employees into a qualifying pension scheme and contribute to the arrangement.
For larger British businesses, the laws came into effect in 2012 but from April 2014, firms with a PAYE scheme size of between 249 and 160 will need to be ready. However, law firm Irwin Mitchell has discovered that over six thousand SMEs are still underestimating the requirements of auto-enrolment pension laws, despite being less than 50 days away from their staging date. This means that they risk facing severe penalties for non-compliance.
It’s anticipated that 30,000 companies will stage (when automatic enrolment duties come into force for business) over a four-month period in mid-2014. Firms with fewer staff members will be required to comply with the rules by a particular ‘staging date’, according to their size, up until 2018. According to Irwin Mitchell, many business leaders are unaware of their full legal obligations, attributing this to a shortage of pension products for SMEs and limited availability of advice.
“We are pleased to say that many small and medium-sized businesses are ready,” said Nigel Bolton, partner at Irwin Mitchell. “However we think that there are still many that do not fully appreciate what is involved and therefore will not be ready in time.”
He added that an online product dealing with all the issues associated with auto-enrolment is essential in ensuring smaller businesses deal effectively with the significant change to pension legislation.
For more information on automatic enrolment we recommend a visit to www.gov.uk.