UK SMEs were left stunned by news of the government’s auto-enrolment scheme for pensions in 2012 and began to worry about how they were going to meet the implications of the law without harming either their workers or their profit. In 2014 further changes were brought forward in the budget and between pension transfers, trivial commutations and more, the system is more complicated than ever.
According to estimates by the Pensions Regulator, as many as 20% of small employers and almost half of micro-employers are unaware of their staging dates for next year’s pensions auto-enrollment deadlines. Many SMEs assume their staging date is based solely on their current number of employees rather than those recorded in April 2012 via their PAYE number. Time is running out and companies need to act fast.
Some 28,000 businesses have been automatically enrolled in workplace pensions since the scheme began, but with the deadlines for businesses employing fewer than 50 now on the horizon, millions more must prepare now. This is the warning from national financial adviser Lighthouse Group. Businesses with 49-30 employees must be ready for their automatic enrolment staging dates of between August-October 2015. Those with fewer than 30 employees will begin staging as early as June 2015 if selected by the regulator for the early staging trial run, or otherwise from November 2015 through to 2017.
The Regulator also found that 89% of small businesses and 64% of micro employers have sought or are planning to seek consultation with external advisers. With 99.2% of the UK’s 4.9 million private sector businesses employing between 1-49 workers, those who have not yet planned will face stiff competition for advisers.
Pensions enrolment takes a great deal of work and employers must ensure all personnel data is correct and that their payroll system is capable. According to Malcom Streatfield, CEO of Lighthouse Group: “Those who have yet to take action will find themselves at the back of a long queue and, even with external help, time is running out quickly.”
He urges all employers to check their pensions obligations immediately and begin preparations as soon possible. Staging dates can be determined by entering PAYE references into a tool provided by the Pensions Regulator.