Two thirds of small businesses have no idea when they must comply to automatic pensions enrolment, research finds.
Nearly a third (32 per cent) feel they don’t know enough about auto-enrolment to be able to gauge its likely impact on their business, and almost half (49 per cent) say they understand little or nothing about the changes they will need to make.
According to a study by chartered accountancy firm HW Fisher & Company, fewer than one in four (23 per cent) have taken steps to get ready, with nearly twice as many (42 per cent) saying they know what needs to be done but have yet to start.
Some 35 per cent admit they have done nothing as they don’t know how to start. In total three quarters (77 per cent) have still not begun to get ready for the changes.
Those polled give a bleak assessment of their preparedness for the arrival of auto-enrolment. Half (52 per cent) describe themselves as ‘not at all ready’, with a mere 21 per cent declaring themselves ‘completely ready’.
Yet despite this lack of preparation, there is a surprising level of complacency. Some 34 per cent of respondents say they are still ‘hoping for the best’, with a further 24 per cent feeling ‘completely confident’.
A clear majority of those polled express concern about the likely cost – in both time and money – of setting up a company pension scheme.
Three in ten (30 per cent) say they are worried about the set-up costs, with twice as many (62 per cent) fretting about the ongoing expense of making employer contributions to staff pensions. Nearly half (47 per cent) say they fear the extra admin involved in managing a pension scheme.
From August firms with more than 60 PAYE employees will have to comply, and by this time next year thousands of firms with fewer than 30 staff will have to offer their employees a pension.
Sailesh Mehta, partner at HW Fisher & Company says, ‘The smaller the company, the later the staging date, but this is no reason to ignore your obligations. The earlier you start to prepare for auto enrolment, the easier the transition will be.
‘The Pensions Regulator has pledged to write to employers 18 months before their staging date, and when you get the letter, you shouldn’t delay. Choosing an auto enrolment scheme and bedding it in can take several months, and you should get expert financial advice to help you pick the right scheme for your company.’
Mehta adds that it’s equally important that you plan for how you will meet the extra cost of making pension contributions for your staff.
‘By 2018 employers will have to pay at least 3 per cent of basic pay per employee into a pension scheme. But the pension contributions you make will also lower your National Insurance bill – so it’s essential that you seek advice in order to budget accurately.’