SMEs ‘need to act now’ to address auto-enrolment


Business owners are being warned they need to take action sooner, rather than later, to ensure they do not face financial penalties for breaking the rules surrounding auto-enrolment.

Research published by professional services company KPMG has revealed one of the main challenges small to medium-sized enterprises (SMEs) are likely to face is finding a pensions supplier in such a short space of time.

As many as 40,000 firms are expected to sign up to the government-led initiative this year, which it’s hoped will help millions of employees save for their future via pension schemes. Employers are expected to contribute a minimum of one per cent to every worker’s pot this year – with the figure rising to at least three per cent by 2018.

While the country’s larger firms have already been signing their workers up to the scheme since 2012, owners of smaller businesses will now also be required to adhere to the same guidelines. A large-scale roll-out is planned to begin from April 1st, starting with SMEs that have between 160 and 249 employees.

Recently, The Pensions Regulator revealed 2.8 million members of staff were already involved in a pension scheme via auto-enrolment, with around 9,000 employers taking part in the drive.

KPMG’s pensions director for the south-east Andy Seed said: “Appropriate arrangements will need to be in place to ensure employees can be auto-enrolled in a pension scheme, IT and payroll systems are adequate, registration with the regulator is carried out and crucially that suppliers are given adequate lead in time to support any new or updated processes.”

Companies that fail to adhere to the new guidelines could face the possibility of being hit with financial penalties, which include an initial fixed fine of £400. This can escalate to daily fines of anything between £50 and £10,000 if they continually fail to comply.

What have your experiences been with preparing for auto-enrolment? Are you ready for your staging date?

The Secret Businessman