By Daniel Hunter
With approximately 45,000 businesses set to stage for workplace pensions Auto Enrolment in 2015, a leading industry report has admitted small and microbusinesses ‘may not be prepared’ for this sweeping industry change.
The National Employment and Savings Trust’s (NEST) annual insight report found 83 per cent of employers yet to stage do not have an active pension scheme in place — highlighting the big step change which needs to happen for Auto Enrolment to be a success.FIFA Coins NEST also found while businesses are showing a growing awareness of Auto Enrolment (91% of small businesses, and 85% of micro businesses are aware), less than one in five (18%) feel they completely understand what Auto Enrolment means for their business.
On top of this, the report states: ‘there is still a picture of uncertainty and confusion around methods of saving for retirement’ for consumers. Only a small minority (13 per cent) of people agreed they ‘know enough about pensions to decide with confidence how to save’.
Jonathan Dowden, from leading business software provider Sage, warns that the majority of small businesses will be entering ‘uncharted territory’ around Auto Enrolment.
“This research shows that pensions remains a top three priority for consumers, however for small businesses up and down the country Auto Enrolment will mean pensions will be top of their priority list for 2015.
“Up to 45,000 employers per month will begin to stage in 2016 so it is vital that those small businesses that have not yet begun to plan for auto enrolment should begin to do so. It’s clear from the findings both businesses and consumers are still not clear on what Auto Enrolment means for them. Only 18 per cent of businesses and just 13 per cent of consumers described themselves as ‘confident’ around Auto Enrolment. This low rate of understanding means there are still lengths to go before Auto Enrolment becomes the success the Government wants it to be.
“The Pension Regulator recommends firms spend up to a year planning to ensure a smooth transition. NEST found that 83 per cent of employers yet to stage do not currently have an active scheme in place so this will mean the majority of small businesses will be entering unchartered territory.
“Auto Enrolment need not break the back of small business, the heavy lifting can be taken out of the process with having the correct and most up-to-date software. Early planning and seeking advice are key to ensuring that you are compliant and your employees know their options”, warns Jonathan.