Beating the auto-enrolment challenge as a small business

In this piece in association with KashFlow, we look at the challenges of auto-enrolment and talk to small businesses about their experience.

The Pensions Regulator estimates that more than 570,000 small businesses will stage for auto-enrolment over the coming 12 months.

It is something to be taken seriously; research shows the UK’s small and micro-businesses face being slapped with around £25 million of fines for missing the government’s auto-enrolment deadline.

Setting a business up for auto-enrolment can be frustrating, but it’s a challenge of several degrees. To a large business with a substantial bank balance, it’s a minor inconvenience; to an small business with limited resources, it can seem like an insurmountable obstacle.

It is not a quick or cheap process. In fact, it can take up to eight months to get a business ready and can cost a small business (with one to four employees) up to in £11,300 in man-hours.

Bill Monty, independent financial adviser specialising in auto-enrolment, at Sable says, ‘As each of your employees will have their own set of circumstances – period of employment, age and salary – they’ll each need to be individually assessed prior to enrolment.’

But time is not the only factor you have to consider. Auto-enrolment compliance in itself is also complex. The processes and requirements are explained in a detailed government document, but at over 670 pages it is probably not something you will have time to read in its entirety.

Even if you do make time to read it from cover to cover, fully understanding each section will be another challenge. However, understanding what is expected of you is of crucial importance, as the consequences for noncompliance are severe.

‘Businesses that fail to implement auto enrolment will be charged an initial penalty of £400 and if, four months later, you are still found to be noncompliant you may be charged a daily fine of between £50 and £10,000,’ Monty adds. ‘This will continue until such time that a scheme has been implemented to the correct specifications.’

Add to this the fact that only about 15 per cent of independent financial advisers are speaking to their clients about the impact of auto enrolment and that many large pension providers are ill-equipped to partner with SMEs, it is easy to understand why you might feel discouraged.

The auto-enrolment process

Neil Westwood, managing director of Magic Whiteboard, has just gone through this process. choosing NEST as his provider and are starting before the official date of September 1st. ‘We are doing via accountants who do my payroll. It’s going to cost extra £50 a month to submit all info to NEST, plus the cost of all contributions,’ he says. ‘Another cost for small businesses.’

Karla Jobling, COO and owner of recruitment company Beecher Madden says she has already gone through auto-enrolment and it is a time-consuming, but ultimately manageable process.

‘One of the biggest challenge as a smaller employer, is the culture vs process driven nature of auto-enrolment,’ she says. ‘My staff are used to having a conversation with me about things like this and being able to just ask me or drop me an email to make changes.

‘To ensure you are compliant, you need to send all staff letters. If they want to opt in or out, they need to send an email with confirmation that they wrote it and a specific subject line. Or they need to contact the pension provider directly.’

The KashFlow Auto Enrolment suite has auto enrolment assessment fully integrated into payroll. If you’d like to discuss setting up a demonstration of the KashFlow Auto Enrolment suite then call us on 0800 133 7529.

Further reading on auto enrolment

Ben Lobel

Ben Lobel

Ben Lobel was the editor of from 2010 to 2018. He specialises in writing for start-up and scale-up companies in the areas of finance, marketing and HR.

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Auto Enrolment

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