HR · 8 February 2016

Small firms advised to prepare ahead of surge in auto-enrolment activity

shutterstock_300014042
Small firms are advised to prepare for a “tidal wave” of auto-enrolment activity this year

Small businesses preparing for auto-enrolment should seek proper legal advice well in advance of staging dates in order to ensure obligations under the new system are met, experts have warned.

With auto-enrolment activity expected to escalate throughout 2016, hitting the UK’s community of small firms like a “tidal wave”, officials from the government’s Auto Enrolment Advisor service have encouraged employers to prepare early.

However, new data published by the Federation of Small Businesses (FSB) found that 45 per cent of small businesses remain confused about rules for enrolling employees onto a workplace pension scheme.

In response to the FSB findings, Graham Robinson from the Auto Enrolment Advisor, said: “The number of schemes registered is rising sharply and 2016 is set to be an exceptionally busy year, the peak is expected to be August 2017.

“The auto-enrolment ‘tsunami’ has started, and our advice to small firms is to seek proper legal advice and start the necessary processes as soon as possible. Added to this, the first employers that tackled auto-enrolment in 2012 will be the first to implement re-enrolment, which may put further strain on the administration process of providers.”

According to the FSB report, a quarter of small businesses are concerned about being able to cope with the financial demands auto-enrolment may bring, whilst three-quarters are worried that increasing regulations related to auto-enrolment will put too much pressure on day-to-day operations.

Established to guide business owners through the auto-enrolment process, the Auto Enrolment Advisor also warned smaller employers about facing an imminent “capacity crunch” as more than a million small businesses comply, or ‘stage’, with auto-enrolment over the next two years. Tens of thousands of businesses are expected to ‘stage’ each month, with over 500,000 employers expected to do so in 2016 alone.

“Small and micro businesses have less awareness of the issues auto-enrolment can bring such due to size,” Robinson went on to say. “They don’t have in-house human resources departments to manage the process, like many of the larger employers who met earlier obligations. Early preparation is critical to negate this.”

The government’s auto-enrolment rules were rolled out in 2012, impacting larger employers first of all. The FSB found that despite 51 per cent of businesses reporting that challenges posed by the new workplace pension system could be met, 26 per cent were not aware of auto-enrolment staging dates.

With increasing media coverage and advertising like The Department for Work and Pensions’ recent Workie campaign, the government is confident that employer confusion surrounding auto-enrolment will diminish. However, Robinson added: “It should be stressed that the earlier business owners speak to advisors, the more they can help with auto- enrolment.”

Still got some questions about your auto-enrolment responsibilities? Read our expert’s checklist for micro firms.

Sign up to our newsletter to get the latest from Business Advice.


 
TAGS:

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.

From the top