A lack of awareness and regard for the government’s auto-enrolment legislation on pensions could stymie its introduction, new research shows.
A third of small and medium-sized businesses in the UK do not plan to comply with new legislation on pensions in business.
In a study conducted by employee benefits adviser Secondsight, findings also show that two thirds of SMEs have ‘little or no knowledge’ of the new law.
The government’s auto-enrolment pension rules, which are being phased in based on business size, mean that a proportion of an employees wage will automatically be added to their pension pot. Their employer will then be obliged to make a contribution alongside the government.
However, Secondsight’s study reveals that, based on its discovery that a third plan to do nothing, penalties for avoidance could reach £30 million a day.
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Matthew Mitten, partner at Secondsight, says that he is surprised at the amount of SMEs which plan on shunning the legislation.
‘Of course, not all non-compliant SMEs next year will receive on escalating penalty and the reality is that most still have enough time to plan but the figure we quote clearly demonstrates the lack of awareness around the fines and the enormous impact they could have on SMEs,’ Mitten adds.
‘Equally the lack of knowledge about that new rules and the timescales involved in a serious issue that needs to be realised.’
In preparation, a third of SMEs which are planning to comply will be doing the associated work in house.