Member Article

Fewer than 1 in 5 small businesses ready to comply with pension auto-enrolment

Business owners are burying their heads in the sand when it comes to planning for the introduction of pension auto-enrolment, according to specialists at Clayton & Brewill.

“Businesses need to be planning for auto-enrolment at least 12 to 18 months ahead of their staging date” said Doug Perry, partner at Clayton & Brewill.

“For organisations with 90 to 159 employees, auto-enrolment will come in on 1st May 2014 but unfortunately there has been a definite ‘head in the sand’ approach by many businesses. Leaving it until the last minute can reduce the choice of pension scheme, lead to increased costs and even run the risk of falling foul of the Pension Regulator’s requirements.”

The aim of auto enrolment is to encourage individuals to save for their retirement and, under the regulations, all businesses will ultimately need to make a minimum pension contribution of three per cent per eligible employee.

Research by Clayton & Brewill has shown however that less than one in five small businesses have a pension scheme in place, and that only a handful of these comply with the auto-enrolment requirements.

Chloe Hughes, head of Payroll Services at Clayton & Brewill explained that the main problem for many businesses lies in the sheer volume of detail that they need to work through: ’Employers need to assess their workforce for eligibility to calculate how much each should contribute and who is in and out of the scheme, as well as reviewing any existing pension arrangements and assessing their payroll software for its suitability to handle the contributions and deductions.

‘We recommend that employers act now to put in place a plan that will enable them to effectively manage the time and cost implications of auto-enrolment. This plan should cover an analysis of current processes and software, assessment of eligible workers, a review of any existing pension schemes, and a clear employee communication plan. Firms may also need to review workers’ employment contracts to accommodate pension changes.

‘Auto-enrolment is here, it isn’t going away, and there will be an inevitable impact on cash flow. By planning early however, businesses can put in place strategies for dealing with both the financial cost and ongoing compliance requirements.’

Find out more

For help with any aspect of your payroll requirements, including planning for auto-enrolment, please contact Chloe Hughes on 0115 950 3044 or by email at chloe@claytonandbrewill.com

This was posted in Bdaily's Members' News section by hilary campton .