As 2015 progresses, increasing numbers of small and medium sized businesses (SMEs) are getting closer to their automatic enrolment staging date, where they will be required to put workers – who meet certain criteria – into a workplace pension scheme.
Hundreds of thousands of small employers across the UK will have started receiving letters from The Pensions Regulator (TPR) telling them of their automatic enrolment duties as an employer. Yet, when I attend and give presentations on the theme of automatic enrolment, I am constantly surprised by the large numbers of blank faces in the room, when I ask them if they know when their staging date is.
However, on a more positive note, I am encouraged to read that the impact of the General Election has not affected the work of TPR – recent articles have highlighted that the organisation has been continuing to step up its enforcement activities when it comes to the automatic enrolment legislation.
During the first quarter of this year (1 January – 31 March 2015), TPR issued four escalating penalty notices. Small businesses – soon to confront their automatic enrolment duties – need to take TPR’s actions seriously, because it is fully intends to enforce this legislation and to ensure that businesses enrol their staff into workplace pensions. And because of this, businesses can not afford to bury their heads in the sand.
Research we reported on in March 2015 highlighted (encouragingly) that 97% of those businesses we questioned stated that they intend to comply with the legislation. Whilst only 3% advise they won’t comply. However, whilst this seems a relatively low figure, it equates to around 45,000 small businesses in total; that’s still a pretty high proportion of the SME community.
And, when it comes to the employees, 48% are either unsure, or they don’t
think their employer will even provide a workplace pension for them.
The escalating penalty notices carry a fine of between £50-10,000, depending
on the size of the employer in question, but accrued over time they could do
serious damage to any business. I wonder if those 45,000 businesses will
take the same stance around complying when they are clamped down on?
TPR’s recent actions should provide a stark warning to the SME community.
Our research also highlighted that nearly one third (31%) of employers still
don’t know what automatic enrolment is, increasing to 37% in companies with
Given the fact that many small businesses will need to comply over the next
few years, or face heavy fines for not doing so, I find these stats, and the
general lack of awareness when it comes to the legislation concerning. The
message still doesn’t seem to be getting through.
In any small business, time is precious. Business owners rarely have the
capacity to read journals or attend events – or do anything that detracts
them from the day job. Putting a pension scheme in place is probably not
high on their priority list.
Getting the automatic enrolment message across to this audience is not an
easy task. More needs to be done or there is a real danger people will leave
it too late or get fined.
When it comes to automatic enrolment, the time has come for greater clarity
and improved communication at all levels. Only then will the messages filter
The messaging needs to highlight that it doesn’t need to be complex. It
doesn’t have to be about the fear of the unknown; there are providers and
partners who can guide businesses through the process quickly and easily.
And this messaging needs to be communicated across the board, via trade and
industry bodies, the Department for Work and Pensions, accountancy firms,
banks and so on…
When it comes to automatic enrolment, the industry is dealing with so many
unknowns. Collectively we need to begin promoting its importance – more
frequently and more effectively.
Enrolsme is a complete online automatic enrolment solution. Through the
system, businesses can be set up with a qualifying and compliant scheme in a
matter of hours.
Foster Denovo Enrolsme Ltd is an appointed representative of Foster Denovo
Enrolsme is a non-advised process and other options are available which may
be better suited to a small business. They may be more complex and they are
not offered under this solution. Small businesses who want to explore these
options may wish to contact a financial adviser.
(1) Surveys conducted by Censuswide on behalf of Enrolsme between 27
February 2015 and 05 March 2015. The employers’ survey was conducted with
200 employers and 50 charities in businesses employing 1-50 people with no
pension in place. The employee survey was conducted with 250 employees in
businesses employing 1-50 people who offer no workplace pension.