- Creative Auto Enrolment urges SMEs to take action now to avoid the severe penalties bigger businesses have already face
With only days to go before 2015 begins, Creative Auto Enrolment is urging the 1.2million companies yet to stage for auto enrolment to get the legislation on their radar.
1st January 2015 marks the staging date for companies with 58 employees and thousands more SMEs are due to stage throughout the rest of the year. However only 15% of businesses staging between April 2014 and April 2015 felt well qualified to handle auto enrolment preparations and this uncertainty around the legislation is expected to increase as smaller firms begin to stage.
Not only do smaller businesses lack confidence when it comes to auto enrolment, Creative Auto Enrolment’s research found that the majority of employers (66%) admitted that choosing a pension scheme and plan was at the top of their worry list. Furthermore, only 16% felt confident to communicate auto enrolment to employees within a specified time limit.
Creative Auto Enrolment warns that SMEs could face severe penalties if they fall foul of the auto enrolment legislation. Recent government figures show that half of the investigations into auto enrolment compliance so far have resulted in potential and actual breaches of the legislation. This percentage has doubled since earlier this year and the first penalties have been issued, with Dunelm forced to pay both backdated employer and employee contributions. These instances are expected to increase further as smaller businesses with less in-house resource tackle the legislation.
Smaller firms have the opportunity to learn from bigger businesses to avoid the auto enrolment pitfalls that have been witnessed since the legislation’s launch that lead to administrative, financial and legal headaches.
David White, Managing Director of Creative Auto Enrolment, comments: “We are genuinely concerned about how businesses staging in 2015 are going to cope if the events of this year are anything to go by. In 2014 we have seen missed staging dates, investigations and penalties and as smaller businesses stage next year, these incidents are only going to increase. The 103 man days and 33 tasks required to prepare for auto enrolment means it is no small feat. SMEs must make this top of their list of New Year business resolutions to stay one step ahead and avoid falling foul of the legislation.”
CASE STUDY STORIES
Pension Scheme Picking
Finding a pension scheme was a hurdle for Ceema McDowell from Bristol-based Consumer Intelligence, who turned to Creative Auto Enrolment for auto enrolment support and its special terms with Scottish Widows. “Our biggest challenge was finding a pension provider that was suitable for us” she explains. “Many providers weren’t interested in our business due to our size, which made it difficult and added to the auto enrolment burden.”
Clearing Up Communications
Jeremy Booth from Catherine Johnstone Recruitment, which staged in May, was concerned about handling employee queries and the possibility of inadvertently encouraging employees to opt out of the scheme. He says: “The amount of administration associated with auto enrolment was something that kept me awake at night. We also wanted to get employee communications right to avoid the minefield of opt-out coercion.
