January 15, 2016
When it comes to compulsory workplace pensions, new research has found that many small businesses are still unclear what they need to do, when they need to do it and how much it will cost.
A survey by the Federation of Small Businesses (FSB) has found that 45% of SMEs are unclear about their responsibilities and 25% are not sure if they can cope with auto-enrolment.
Although small firms generally believe auto-enrolment will be good for their staff, the FSB research finds that 76% say auto-enrolment puts too much pressure on businesses like theirs.
Over the next two years more than a million small and micro-businesses will need to set up a workplace pension for their employees under the Government's automatic enrolment rules. However 26% of those polled still haven't checked when their staging date is.
The FSB has also found that businesses are underestimating the costs of implementing auto-enrolment. On average, smaller businesses still to start the process expect overall costs to be approximately £903. However, firms that have already introduced a workplace pension reported average costs of £1,436, with 19% spending more than £2,000.
Although costs are likely to be higher for firms with more than 50 employees, these findings suggest that the smallest business could be underestimating the costs too.
The survey also showed that 21% of those that have already complied said they had frozen or reduced wages to cover the cost of auto-enrolment. Of those firms yet to start auto-enrolment, 30% said they expected to freeze or cut wages.
John Allan, FSB national chairman, said: "Our message for small employers is auto-enrolment is coming and will affect your business - and the sooner you get to grips with what you need to do, the better off you will be. Most of the businesses which have already set up a workplace pension told us they found the process fairly straightforward, but we know many remain concerned about their ability to cope. These businesses should feel reassured that there is plenty of information and support available to help them through this process, both through the FSB and from the Pensions Regulator."
The FSB offers a workplace pension product for its members that helps business owners set up an auto-enrolment pension scheme. The Pensions Regulator website has guidance on all aspects of auto-enrolment for employers.