HR · 28 January 2016

Auto-enrolment: Small and micro firms rise to the challenge

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Small and micro businesses that reached the early auto-enrolment staging date last year showed a 90 per cent compliance rate

The first group of small and micro businesses to reach the auto-enrolment staging date achieved high rates of compliance with responsibilities under the new framework, suggesting smaller employers are generally able to navigate through the potentially choppy waters of auto-enrolment.

The latest Pensions Regulator Quarterly Compliance and Enforcement bulletin demonstrated a 90 per cent compliance rate amongst early-staging small and micro businesses to have reached a staging date in June last year.

The figures indicate that, with simpler payment set ups and fewer staff, small businesses might be better equipped for auto-enrolment than larger firms. Small employers were found to be meeting responsibilities without needing to call pension schemes or use full waiting periods.

However, worries remain about the potential costs small businesses could face as a result of auto-enrolment. Policy director at the Federation of Small Business (FSB), Mike Cherry, warned that small firms need to ensure legislation is properly understood and that preparations are made well in advance of staging dates.

“It’s good to see such high levels of compliance among small firms that have staged so far,” said Cherry. “Smaller businesses recognise that auto-enrolment will be good for staff, however it is clear that many will struggle to get to grips with the legislation, whilst large numbers are concerned about the costs.

“Smaller firms should seek advice and guidance from trusted parties, including the FSB. Auto-enrolment is a legal requirement for every employer, and those that fail to comply run the risk of being fined.”

NEST, the national workplace pension scheme set up as part of the government’s pension reforms and available to all employers to use to meet the new requirements, had some interesting data. It found that 44 per cent of employers that staged in summer 2014 auto-enrolled the first workers in the three-month period after the staging date, reducing to 29 per cent of small firms and 26 per cent of micro businesses.

The information showed that the smaller the employer, the more efficiently the auto-enrolment process was handled.

The same survey also revealed that 72 per cent of small and micro firms expect to have to call NEST for support or advice rarely or never, indicating that in the future these firms expect managing auto-enrolment to be easy, and not time-consuming.

Commenting on auto-enrolment developments, CEO of NEST, Helen Dean, said: “These are the first insights of this kind. We’ve looked at real experiences, thoughts and behaviours of small and micro employers as they navigate their way through auto-enrolment. Did they struggle? Did they fail? Is auto-enrolment too much for small and micro employers? Our figures showed that concerns are largely unfounded.

“Defying expectations, small and micro employers are rising to the challenge and meeting auto-enrolment head-on,” added Dean.

Are you aware of your business’s responsibilities under auto-enrolment?

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ABOUT THE EXPERT

Fred Heritage was previously deputy editor at Business Advice. He has a BA in politics and international relations from the University of Kent and an MA in international conflict from Kings College London.

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