Awareness of auto-enrolment pensions for micro businesses increases

As the staging date for employers with fewer than 30 staff approaches, new research has found that more than three quarters of micro businesses are now aware of the legislation.

Having first come into force for companies with more than 250 employees in 2012, auto enrolment is growing in terms of awareness and understanding, findings from the Pensions Regulator shows.

Micro businesses in recipe of a 12-month T-12 letter were found to be 83 per cent were of auto enrolment, while those not were 65 per cent aware.

The legislation means that businesses are, or will be, required to enrol those who are eligible into a workplace pension scheme and then contribute towards it. Those companies which do not comply will face enforcement action in the form of fines (up to 10, 000 a day) or prosecution.

Micro businesses will be the last business class to have to comply with the new law. When it was first announced, the government unveiled a number of dates relating to the staging and implementation dates of certain business size brackets.

The Pensions Regulator believes that understanding levels are showing improvement, with the number of small employers citing a so-called understanding now at 59 per cent while micro businesses were up to 48 per cent. These represented increases of nine per cent and 14 per cent respectively.

An extension of the organisation’s research also found that more micro employers intend to use an advisor than was the case when a similar poll was taken in autumn 2014. Now, 64 per cent of businesses in the space expect to rely on an advisor to provide practical assistance up from 55 per cent before.

While small businesses were more likely to use an independent financial advisor (IFA), micro companies are leaning towards accountants.

Employer-targeted advertising on the subject of auto enrolment began in 2013 on a sporadic basis, before becoming a continuous campaign in 2014. The Pensions Regulator has stated the main audience for the advertising so far was been employers who will be staging from June 2015 onwards those with fewer than 50 staff, with most less than 30.

TV was identified as the best way of exposing micro businesses to auto enrolment, followed thereafter by print media, a letter from the regulator and websites.

Executive director of automatic enrolment Charles Counsell said: The challenge of ensuring 1.8m employers meet their duties by 2018 is significant and the research shows many employers are still not preparing early enough.

we continue to develop new tools on our website to simplify the process for employers and we are using a diverse range of communications to reach out to employers, but my message to employers remains clear: start getting your plans in place or you risk a financial penalty.

it is also positive that more advisers have stepped up to meet the needs of employers by developing new services, and by directing clients to the regulator’s website. I urge all intermediaries to ensure they can fulfil this vital role as more employers seek assistance.