The cross-party Public Accounts Committee recently raised concerns about new legislation that will require SMEs to register their employees for workplace pensions. What exactly is expected of SMEs under the new scheme, and how can they cope with the change?
Under the new regulations, small businesses are expected to automatically enrol eligible employees into an appropriate pension scheme and contribute towards their pension savings. Automatic enrolment was first introduced for larger businesses in 2012, but did not affect smaller employers until January 2016. Non-compliance can result in financial penalties; the Pensions Regulator has already reported a sharp increase in compliance notices and fines issued since October 2015.
The auto-enrolment regulations now apply to 1.8 million small businesses yet a survey of the Federation of Small Businesses suggests that almost half of these businesses remain confused about their obligations under the new scheme. Rich Preece, Europe Vice President and Managing Director of accounting software company Intuit Quickbooks, estimates that small businesses could face costs of up to £2,000. However, research carried out by this software company revealed that 40% of the SME owners involved are unaware of the possible financial impact of auto-enrolment.
Steve Herbert, Head of Benefits Strategy at Jelf Employee Benefits, stated that: "The legislation is heavily weighted against SMEs and startups given that smaller organisations do not have the luxury of financial scale, or physical resource, to commit to running a pension scheme." In addition, research conducted by Exemplas found that auto-enrolment is one of the biggest challenges facing UK small businesses this year, with Chief Executive Jill Barnes stating that "[the] smaller companies we surveyed commented that they simply do not know where the money will come from to fund this scheme."
In light of the potential impact auto-enrolment could have on resources, it's more important than ever that small businesses prepare for the future by maximising their cash flow. Ethical Enforcement Agents like Dukes Bailiffs can assist through the timely recovery of outstanding debts. If you're an SME owner who's concerned about the cost of auto-enrolment, contact us today to discuss how we can help.