Making Auto Enrolment a top priority for firms
Around 45,000 businesses will require Auto Enrolment in 2015 but there are concerns that many of them are not yet ready for the changes.
Small and micro businesses will soon need to enrol employees into schemes, but the National Employment and Savings Trust has found 83% of firms lack an active pension scheme.
Awareness of Auto Enrolment is growing as 91% of small businesses and 85% of micro businesses have heard of it, yet only one in five feel they actually understand what it means for them.
Further uncertainty relating to the best ways to save mean decisions relating to pensions are delayed.
In many instances firms face unknown territory despite an awareness that something needs to be done – many small businesses are being advised to plan ahead.
Auto Enrolment could place considerable pressure on finances for some companies, with the Pension Regulator suggesting up to a year is required to ensure a smooth transition.
The lack of plans currently in place is of concern, given that nearly 50,000 businesses per month will need to stage from the beginning of 2016.
While enrolment was not set up to make life difficult for small firms, those that fail to plan and invest in the necessary software are making it tough for themselves.
Seeking advice relating to enrolment is recommended while those with serious financial concerns should question insolvency practitioners on the best course of action for moving forwards.
This should potentially highlight any major issues and should enable firms to get their finances in order ahead of their turn in the staging process.
The Pensions Regulator has now started issuing penalty notices to firms not complying with Auto Enrolment regulations.
Some 166 were issued in the final quarter of 2014, up from just three in the previous quarter when notices were first issued.
These firms faced £400 fixed penalties after failing to comply with unpaid contributions notices or compliance notices – more than 1,100 of these were sent out in the fourth quarter of 2014.
Firms are encouraged to declare five months or more before their staging date to avoid facing notices or potential fines.
By Phil Smith