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Half of UK companies that have introduced the auto-enrolment pension rules surveyed for a report wished they had given themselves more time to prepare for the changes to legislation.
Yet small and medium-sized firms – which are now required to introduce auto-enrolment – appear to be underestimating the impact of the changes on their business, according to law firm Irwin Mitchell, which surveyed 260 companies.
Just 28% of SMEs believe they will struggle with the ongoing administrative burden of auto-enrolment. Less than 5% said they thought finding a suitable pension product would be an issue despite many financial institutions announcing that they would not be supplying a product to the SME sector. Tuesday marked the staging date for 6,000 UK SMEs that employ between 160 and 249 people to auto-enrol staff into a workplace pension scheme.
Half of the large companies that have already introduced auto-enrolment said that ongoing administration and ensuring that their back office systems were ready have been the two most difficult aspects of auto-enrolment compliance. One third confirmed that they had taken on extra staff in order to deal with the additional administration.
Compared to large businesses, Irwin Mitchell’s survey also found that SMEs are less inclined to seek legal advice in relation to changes to their existing pension schemes or their employment contracts.
Nigel Bolton, pensions partner at Irwin Mitchell said the law firm had conducted a survey last year to see how prepared SMEs were for auto-enrolment and found that a number had not considered the key issues.
“Sadly this still appears to be the case,” he added. “Many larger organisations say that they regret their approach to auto-enrolment and say they wished they had given themselves more time. I have major concerns that the impact will soon be felt by SMEs and because they do not have the back office teams and systems that their larger counterparts have, the impact could be considerable.”
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