By Matthew Mitten, Director of Enrolsme
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.
A survey conducted by Sage UK* found that only 1 in 100 independent financial advisers believe small businesses are well prepared for automatic enrolment, and just one in five (21 per cent) agreed that small firms were aware of the legislation. 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.
Automatic enrolment is a government-led initiative, yet I am constantly surprised by how little of the message seems to be getting through. I know there have been a number of campaigns, but when I speak to SMEs most either haven’t seen them, or didn’t know what these campaigns related to. I still believe there are a large number of UK SMEs that don’t even know what automatic enrolment is, let alone what their employer obligations are.
In any small business, time is precious. Business owner managers 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 through.
I really believe now is the time for the government to issue specific warnings to small businesses not to put automatic enrolment on the back-burner, and to emphasise the role it plays towards saving for the future. 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.
*Reported on in June 2014