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HR 1 August 2016
Why auto-enrolment needn?t be a headache for micro firms
The government isn?t doing enough to raise awareness of lower-cost, high-speed workplace pension solutions among micro firms, writes Paycircle co-founder Catherine Pinkney. Over the past week or so, The Pensions Regulator (TPR) has issued two new bulletins giving a progress update on the roll-out of compulsory workplace pension schemes among small and micro businesses. While compliance levels overall are high ? roughly 95 per cent to date ? the TPR has warned that one in ten micro businesses approaching their ?staging date? still have no idea what auto-enrolment is, while just over a fifth know what it is but haven?t the faintest idea where to start. It will come as no surprise, then, that the number of penalty notices being handed out to small and micro businesses rose quite sharply in the second quarter of the year. ?We used our powers a total of 4,489 times during the last quarter, compared with 4,161 in the previous three months,? announced the TPR in late July. Given that 57 per cent of UK employers left to stage are businesses employing between one and four people, the chances are that a lot more fines will be issued in the weeks and months ahead. The hardest part of the great auto-enrolment roll-out was always expected to be the long tail of small and micro businesses, and that?s rapidly proving to be the case. Things haven?t been made any easier by Brexit. Although we?re yet to see any hard economic fallout from the vote to leave the EU, many smaller business owners are understandably more focused than ever on their core propositions at present, which means that housekeeping and administration have become even less of a priority. Cue even more fines. All in all, it?s more important than ever for the TPR to get its message out there that micro businesses need to start preparing for auto-enrolment, and soon ? or face a financial hit in the form of a fine. Critically, the regulator also needs to debunk the myth that auto-enrolment is both time-consuming and expensive. In our opinion, it?s above all the perceived mountain of work that setting up a workplace pension involves, not to mention the cost that is resulting in micro business owners procrastinating. In reality, however, micro businesses can set up a fully compliant workplace pension scheme themselves at no cost, and in some cases in as little as an hour. But this message just isn’t getting across. A new breed of technology-based platforms is available that connects a small company?s payroll to a pension scheme via an API (application programming interface). One of the leading examples is the API provided by the government-backed Nest pension scheme. More than ever, regulators need to debunk the myth that only an expert can take care of micro business auto-enrolment because it?s highly technical. The reality is that the whole process can be quick and cheap. Clearly some business owners will want the reassurance of someone else setting up their workplace pension, or a more bespoke scheme, but for those who would happily do it themselves and simply want to abide by the rules, the DIY option is low-cost and high-speed. The TPR needs to drive this message home, and fast. Catherine Pinkney co-founder at Paycircle.?