A large proportion of the UK’s small and medium-sized businesses are still underestimating the requirements of auto-enrolment pension laws despite 6,000 organisations being less than 50 days away from their staging date.
According to law firm Irwin Mitchell, many business leaders are unaware of their full legal obligations. The national law firm is also concerned that the shortage of pension products for SMEs and the lack of availability of advice could result in many missing the deadline for compliance.
Auto-enrolment will mean that all UK employers must automatically place certain members of their workforce into a qualifying pension arrangement. All employers must contribute to that pension arrangement and must monitor and keep records of their workforce’s membership of the scheme.
The laws came into effect for the UK’s largest businesses in 2012 and from April 2014, firms with a PAYE scheme size of between 249 and 160 will need to be ready. Firms with fewer staff members will be required to comply with the rules by a particular staging date according to their size up until 2018.
It is anticipated that 30,000 companies will stage over a four-month period in mid-2014.
Nigel Bolton said: “We are pleased to say that many small and medium-sized businesses are ready, however we think that there are still many that do not fully appreciate what is involved and therefore will not be ready in time.
“Recent NEST research found that 20% of businesses took 16 months in order to get ready for auto-enrolment. Although many of these organisations are much bigger than those that are yet to stage and have more employees to enrol, it should also be remembered that these larger companies have far bigger specialist support teams and functions.
“Although there is currently no online product which deals with all the issues associated with auto-enrolment, from providing the pension product to providing initial and follow on legal compliance, we firmly believe it is clear that this is essential in ensuring smaller businesses deal effectively with this significant change to pension legislation.”