A CHARTERED accountancy partner and member of the UK200Group of independent accountancy and law firms has slammed the government for its “inability to effectively communicate” with small businesses and the heaping “more costs and more red tape on already overburdened and overstretched small businesses”.
Jonathan Russell, partner at UK200Group member firm ReesRussell, spoke out about news that a study undertaken by NOW: Pensions – an independent, multi-employer trust serving thousands of employers and their employees and a subsidiary of one of Europe’s largest pension funds, ATP – revealed that one in four small businesses have yet to address auto-enrolment legislation, despite thousands of companies being sucked into the scheme in its latest phase from 1 June.
Jonathan Russell, said: “It does not surprise anyone who advises small businesses that they are not prepared for auto-enrolment; indeed it would be more of a surprise if they said they were.
“In part it is down to the continued inability for the government to effectively communicate with small businesses and partly the unwillingness or incredulity that despite constant promises government is yet again foisting more costs and more red tape on already overburdened and overstretched small businesses. Many small businesses do not have the resource or knowledge to deal with auto-enrolment and as a result are burying their heads and hoping that it will go away.
Under the government’s auto-enrolment legislation which kicked in for business with under 30 employers on 1 June, more than 1.2 million employers have yet to begin complying with the new workplace pensions legislation – with another 500,000 having to comply by the end of next year.
NOW: Pensions’ research found that just over one in four (27%) of all businesses who are yet to stage haven’t given any thought to how they’ll find a provider.
While an improvement on 2014 when four in ten (44%) business said they hadn’t thought about it, some 350,000 businesses are still unprepared.
The survey found that a lack of clarity appears to be playing a role as a third (34%) of the 400 SMEs surveyed admitted they don’t understand how auto enrolment minimum contributions are calculated.
Where thought has been given as to how they’ll go about finding a provider, a quarter (26%) intend to seek help from their accountant, 16% are relying on their existing scheme provider, and one in ten (12%) will search the market and do the research themselves.
Morten Nilsson CEO of NOW: Pensions said: “Auto-enrolment is fast becoming a reality for thousands of firms across the country and there really is nowhere left to hide. Although it’s tempting to put it off, auto enrolment is complex and the longer you leave yourself to plan, the easier it will be. Business owners need to wake up to the reality that if they don’t get this sorted, they could face fines of up to £500 a day.
“While most employers are confident that pension providers will be happy to accept their business, the reality is that not all providers will be willing to accept all employers and all employees on equal terms. If you are planning to rely on your existing provider, talk to them early to check they are willing to help.”