Partner Article

How can SMEs deal with auto-enrolment?

Mark Beddowes, of Johnson Fleming discusses how small and medium enterprises (SMEs) can deal with auto-enrolment and the options available to them.

How can SMEs deal with auto-enrolment without taking their eye off the ball?

With UK SMEs in the middle of auto-enrolment, the recent research released by NOW Pensions makes quite worrying reading. The report stated that 44% of small and medium sized companies have still not given any thought as to how they’ll go about finding a pension scheme, let alone how they’ll manage it on a day to day basis. With so little thought given to even sourcing a scheme, it is almost certain that even less will be paid to the management of the scheme.

What are the options available to help SMEs cope with the tasks auto-enrolment brings?

Lots of the options out there have software at their core providing the business, or their advisers, with a system to manage the numerous administrative tasks. This is typical of payroll system bolt-ons or offers from providers direct.

This led me to think about whether this was the best option for SMEs. A lot of the system options are very comprehensive, and certainly provide the opportunity for the business to do everything it needs to for auto-enrolment. But there lies one of the key issues with a software only solution: it is still down to the business to do everything itself.

In challenging market conditions, SMEs should be focussing on their core business activities. Using a software only solution does not allow them to do this as it still requires them to manage the administrative processes of auto enrolment.

Reactive not proactive?

Another drawback of software only solutions is that they often only tell you something has gone wrong once it’s happened. Very few of them will have someone actively monitoring their scheme to identify potential problems or data issues. With the potential fines for non-compliance that the Regulator can impose, ideally businesses need to deal with these issues before they happen.

So what is the answer? For some businesses, a software only or provider direct solution will work well, but as I mentioned above, my view is that staff in SMEs should be concentrating on their day to day business.

However, another option is to outsource the management and administration of the scheme and system to a third party provider. SMEs can focus on their core activities, while the third party provides a comprehensive, compliant administration service and focuses on identifying issues before they happen. This ensures that rather than auto-enrolment becoming another labour intensive administrative process for SMEs, it instead becomes what it was intended to be: a valuable benefit to the UK’s employees.

For more information, email mark.beddowes@johnsonfleming.com.

This was posted in Bdaily's Members' News section by Mark Beddowes .