Workplace pension auto-enrolment warning for SMEs

 

By Itrat Bashir

Workplace pension auto-enrolment - Featured imageFrom next year, small businesses will be required to abide by automatic enrolment for workplace pensions, which according to Richmond House Group (RHG) will pose a big challenge for them.

Automatic enrolment for workplace pensions is a government initiative, taken way back in 2012, to ensure pension cover for those people who could not join their company’s scheme. The initiative binds all employers to give an opportunity to their employees to join the workplace pension.

The various deadlines for auto-enrolment, known as staging dates, have been set in accordance with the size of a business, and if your business falls under the category of ‘small business’ then be prepared, your standing date is fast approaching. Failing to comply with the new requirement could lead to a hefty fine of up to £5,000 for individuals and up to £50,000 for organisations.

Experts at RHG believe that big changes to workplace pensions taking effect next year are an accident waiting to happen for small and micro businesses. Automatic enrolment for workplace pensions will impact small firms from January 2016 but many small businesses are still not ready to implement schemes that meet the new requirements. According to the Pensions Regulator, over 1.7 million small and micro-employers are still yet to stage, with approximately 4.5 million employees to be enrolled into a workplace pension.

Ian Jenkins, pensions expert at RHG, said, “Too many small firms are burying their heads in the sand and hoping auto enrolment will simply go away. The reality is that from January auto enrolment becomes a reality rather than a distant prospect.  The good news is there is still time to get it right but it’s important to act now.”

However, RHG warned that small firms need to assess their needs before taking the next step or risk spending thousands of pounds unnecessarily on workplace pension schemes designed for bigger firms.

RGH advised that small business owners should follow this simple checklist to help them avoid an unwanted visit to the pensions department:

1) Agree your approach: decide whether you have the time to go it alone or need help with the different elements involved.

2) Plan ahead: check your staging date online and add extra time for unexpected delays.

3) Think time and money: understand how much time and money will be needed for automatic enrolment and set aside a realistic budget.

4) Take responsibility: decide who is going to be responsible for automatic enrolment in your company.

5) Pay attention: ensure your payroll records are up to date and talk to your payroll provider and understand how they can help.

6) Don’t assume: existing pension schemes are not always appropriate for automatic enrolment so check it out.

7) Set your goals: understand what you are trying to achieve whether that is simply complying with the law or providing a valuable benefit for staff.

8) Think about HR: check whether changes to contracts are required and if you need expert help with this.

9) Spell it out: agree how best to explain automatic enrolment to staff and whether you need expert help.

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