SME bemusement over auto-enrolment leading to fines
9th February 2016 | News
Almost half (45 per cent) of UK small businesses remain confused about auto-enrolment rules which oblige them to enrol staff in a qualifying workplace pension scheme.
That’s according to a new study by the Federation of Small Businesses (FSB) which signals alarm bells given that three-quarters of small firms surveyed fear the regulations would put too much pressure on them; while a quarter feel their business might not cope with the added financial demands.
The figures have been released amid one of the busiest periods for auto-enrolment activity, hitting the small business community across the country.
More than 1,000 small businesses have already been hit with fines for missing their auto-enrolment deadlines. On the whole, some 500,000 small firms will be required to set up a workplace pension arrangement for their employees this year.
Fines for non-compliance with auto-enrolment commence with a ticket from the Pensions Regulator for the sum of £400; followed by compound fines which can amount to as much as £500 per day for small firms.
Graham Robinson of the Auto Enrolment Advisor believes that, in the main, the majority of small, micro and medium-sized businesses have less awareness of auto-enrolment issues due to their size.
“They don’t have in-house human resources departments to manage the process, like many of the early employers who met their obligations. So to negate this, early preparation is critical,” said Robinson.
Robinson says the number of auto-enrolment schemes is rising sharply, with the peak expected to be next August, although this year is due to be exceptionally busy too.
“Added to this, the first employers to tackle auto-enrolment in 2012 will be the first to implement re-enrolment, which may put further strain on the administration process of the providers,” added Robinson.
“The auto-enrolment ‘tsunami’ that experts have been predicting has started. Our advice to SMEs is to seek proper legal advice and start the necessary processes as soon as possible.”
If you’re already a TaxAssist Accountants client or you’re thinking of becoming one, we offer an auto-enrolment pensions service through Wren Sterling, a national firm of independent financial advisers who offer all businesses a qualifying workplace pension scheme through its Wren Sterling Master Trust.