Two out of five small businesses are worried about the ‘damaging’ impact of automatic enrolment, research finds.
Cash flow and the added administrative burden are the top concerns for small business owners, with two thirds of firms currently not having a pension scheme in place, according to the study by Sage.
The legislation will see businesses of all sizes across the country automatically enrolling employees onto a pension scheme.
Larger firms of 250 employees or more have already held their staging date, but the real challenge will be getting small businesses who are not as well equipped to deal with the sweeping changes over the legislative hurdle, Sage says.
The research, which spoke to 500 small business owners and decision makers in the UK, finds 39 per cent of respondents are concerned that contributions towards employee’s pensions could cause the business to have cash flow issues in the next five to ten years.
Some 40 per cent are worried about the administrative costs involved in setting up and managing auto enrolment, and 51 per cent voice apprehensions over the cost of contributions and the impact on cash flow.
As a result of this, 38 per cent feel this has potential to damage their business. More than two thirds (69 per cent) say they currently do not have a pension scheme in place.
The survey also casts doubts over the government’s ability to help firms through the changes with more than a third (37 per cent) stating that Westminster is not doing enough to raise awareness and help businesses prepare for automatic enrolment.
Lee Perkins, managing director of Sage UKI’s start-up and small business division, says that with small firms already having to navigate red tape and bureaucracy, and the advent of auto enrolment will be keeping small business owners awake at night.
‘However, the reality is that auto-enrolment is here and the added cost could be problematic for businesses. However, help is at hand to get firms through this seismic shift in the way businesses deal with payroll and pensions,’ he says.
‘With staging dates on the horizon for many, the earlier a business seeks help the better but firms must remember that software can do all the heavy lifting and the very complex process of integrating pensions into payroll is turned into just a few clicks of the mouse.’