The Pension Regulator has recently published its findings in relation to small business awareness of pension auto enrolment. Worryingly the research shows that only 29% of small businesses with a staging date in 2016 know when that is.
Awareness of the auto enrolment process is highest amongst small employers compared to micro employers. The Pension Regulator is currently trying to raise awareness through TV advertising campaigns, radio and digital advertising and via social media, All employers receive a letter from the Pension Regulator twelve months before their staging date. This should be a clear prompt for that business to start preparing for the statutory process or face a large fine for non compliance. The first task should be to decide what pension scheme to choose and this will take quite a lot of time to do research. For those companies that do not wish to take up a private pension scheme the government has set up NEST which offers low cost compliance. Preparation for auto enrolment is the key to success and failing to prepare will lead to failure and high costs.
Other sources of how awareness is being raised are through professional advisors such as accountants, book keepers, pension providers, business groups and, of course, savvy HR consultants. The latter are often best placed to help small businesses with the admin burden of auto enrolment.
Information on how to comply with pension auto enrolment is readily available on the Pension Regulator website.
Unfortunately whilst many businesses do eventually get to grips with the process it appears that many forget to complete the declaration of compliance. This has to be submitted to the Pension Regulator within five months of the staging date.
Small employers on the whole believe that auto enrolment is a good thing compared to many micro employers. According to the research 41% of micro employers fear the cost of contributions, however, they need to ensure they do not coerce employees into opting out as such conduct can incur a hefty fine from the Pension Regulator. 14% of them believe they do not have to do anything to comply with this process – they will obviously have to think again if they have employees.
If a micro business does not have any employees and no one in the business has an employment contract, they may not need to comply. However, they should take advice to ensure that this is the case.
Any business that is of the opinion that compliance with auto enrolment is not needed should write to the Pension Regulator giving the reasons why and await a written response that will either confirm their assumptions or not.