Small business owners struggling to deal with auto-enrolment costs
Small firm owners are considering pay freezes and increasing their use of contractors in response to the financial burden posed by auto-enrolment, according to new research carried out by the International Association of Book-keepers (IAB).
Of the member bookkeepers and accountants surveyed by the association, one-in-five indicated that their clients are considering cutting employees hours in response to the legislation.
The accountants and bookkeepers surveyed were also of the opinion that their small firm clients are lacking in understanding of auto-enrolment regulations.
Employers currently have to contribute the equivalent of one per cent of staff’s qualifying earnings to their pension pot though this is set to rise to three per cent in 2019.
Under ten per cent of clients are passing the cost of this on to their own customers, the new research also revealed.
whilst the government, through its agencies, is making some efforts to inform businesses about these new obligations, it would appear that many micro and small businesses feel that it isnt doing enough to support them in either a financial or educational capacity, particularly as many of them are still fighting to find their footing after the recent recession, said IAB chief executive Malcolm Trotter.
Since the first companies were obliged to auto-enrol employees in pensions in 2012, almost five per cent of owners have failed to do so. Micro business leaders who ignore government warning letters about auto-enrolment can be fined from 50 to 500 per day, depending on the size of their firm.
Hannah Wilkinson is a reporter for Business Advice. She studied economics and management at Oxford University and prior to joining Business Advice wrote for Kensington and Chelsea Today about business and economics as well as running a tutoring company.
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