Small businesses ‘must plan now’ for auto-enrolment

December 19, 2013

Small businesses are being urged to take steps now to ensure that they are fully prepared for the introduction of the new pensions auto-enrolment system.

The new rules, which are being phased in over a number of years, require employers to automatically enrol all eligible members of staff into a workplace pension scheme, and to pay a minimum contribution into the fund.

However, the Chartered Institute of Personnel and Development (CIPD) has warned that many small firms are likely to face challenges when implementing the new system, due to limited resources and a lack of expertise.

A survey conducted by the organisation has suggested that while many larger firms have successfully implemented auto-enrolment since its launch in 2012, a significant proportion of small and medium-sized businesses are concerned about the costs and potential complications involved in adopting the scheme.

More than a quarter of SMEs are expecting to reduce pay growth, while a fifth are anticipating the need to freeze pay, in order to absorb the additional costs. Nearly a quarter of firms believe there may be an impact on other aspects of pay, including bonuses and overtime.

Charles Cotton of the CIPD commented, ‘While large companies tend to have long established traditions of paying in to employee pensions, for many SMEs this is their first foray into the world of pensions. They are unlikely to have access to the same levels of expertise or support networks as their larger counterparts and, as our survey reveals, many fear that it could be a costly exercise for their business’.

‘However, with early planning and preparation SMEs can overcome any challenges and realise the opportunity that auto-enrolment offers,’ he added.


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