Small and micro employers aware but not prepared for AE

The staging process for auto-enrolment is about to increase in breadth, but small and micro employers may not be adequately prepared for the change, according to a report from pension-provider Nest.

Of employers yet to stage, 83% do not yet have an active scheme in place; and although 91% of small employers (with fewer than 50 employees) and 85% of micro employers (one to four employees) are aware of the reforms, only 18% feel they completely understand what it means for their business.

Around 43,000 employers have staged so far, and 45,000 are scheduled for 2015. But by 2016, 45,000 employers will be staging each month, and 2017 will see this number grow further.

David Nash, senior policy advisor at the Federation of Small Businesses, said,

There is a discrepancy between awareness and understanding. Only 18% of micros understand how it will affect their business and not all will have the payroll software they will need. There needs to be clear, free guidance, and compliance costs need to be kept low so contributions can be increased.

Despite the lack of readiness, employers reported that they support auto-enrolment and 66% of those using Nest believe that workplace pensions are important. Support is high among small and micro employers as well – 86% and 75% respectively stating that in principle auto-enrolment is a good idea.

Renny Wickham, senior manager at Mazars Employee Benefits Limited, said, “A number of employers staging don’t understand how many others are too. Employers need to start planning 12 to 14 months before their staging date.”

Mr Wickham used the analogy of going into a station and realising how many other people are buying tickets. Employers don’t realise how many others are also implementing their scheme.

Some tickets buyers will purchase a standard ticket, while others will opt for first class. Some employers will pay the absolute minimum when setting up auto-enrolment, while others will put greater detail into their system.

Demand for help remains high – 74% of small and micro employers expect to turn to an intermediary, while 59% are likely to ask an accountant for help and guidance, rising to 70% of those with only one to four workers.

However, only 67 per cent of accountants say they know a lot about auto-enrolment compared to over 90 per cent of independent financial advisers and payroll bureaus.

Petaurum Solutions’ Comment

Complying with Auto Enrolment obligations can be a daunting prospect for many small and micro sized business.  Choosing a cost effective, long-term implementation solution is critical for these businesses to ensure they do not become swamped with the processing requirements and responsibilities that potentially Auto Enrolment can bring.  Therefore, for businesses considering their solution, focus should not only be on the pension scheme, but also on how it will be administered, methods to communicate, impacts on systems and data collection processes along with any HR and Legal changes may you need to make.

Petaurum have developed a complete SME specific, competitively priced end-to-end solution that will take care of the above, leaving you free to manage your business safe in the knowledge that your Auto Enrolment obligations are in professional hands.  Want to know more then feel free to download our info pack here, or contact us to secure your PAE future.

This information is intended as a general overview and discussion of the subjects dealt with. The information provided here was accurate as of the day it was posted; however, the law may have changed since that date. This information is not intended to be, and should not be used as, a substitute for taking legal, HR or benefits advice in any specific situation. Petaurum Solutions is not responsible for any actions taken or not taken on the basis of this information. Please refer to the full terms and conditions on our website.


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