Pensions  

Micro employers misguided on auto-enrolment rules: PFS

Keith Richards, chief executive of the PFS, said the findings suggested that advisers still have “a major role” to play for small firms on auto-enrolment.

As staging dates for smaller firms loom on the horizon, the 19-page report showed that 49 per cent of 507 small firms said they would use an adviser when choosing a scheme. That could mean 500,000 businesses coming into the market for advice.

But micro firms which make up the bulk of smaller firms lacking pension provision were more wary about taking advice. Only 20 per cent of firms with fewer than 10 employees provided a pension, little change since the PFS last surveyed firms in 2012.

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Out of the 302 smallest firms surveyed, 29 per cent said they would rely on internal sources to guide them through auto-enrolment due to concerns on cost and the misplaced perception that it would be irrelevant to them. The number of micro firms which would not take external advice rose from 17 per cent last year.

Mr Richards said: “It is a concern that some micro employers still believe that the reforms will not apply to them. Whether this is due to lack of certainty or lack of awareness, the government must do as much as it can to clarify that auto-enrolment applies to all employers and that they should start preparing as soon as possible.

“A decisive media campaign, particularly targeted at micro employers and encouraging them to seek advice if unsure, would do much to dispel any misunderstanding or confusion.”

Medium-sized employers are preparing for auto-enrolment, according to research by The Pensions Regulator. A survey of 639 companies found that 80 per cent supported the reforms, up 16 per cent since spring 2012, while 27 per cent had started preparations, compared to 13 per cent in autumn 2012.

Adviser view

Duncan Philp, senior consultant for Fife-based Macbeth Currie, said: “I have not come across any small employer who is keen on paying for advice. Having to put a pension in place, possibly for the first time, is already a heavy burden. Most will automatically go into the National Employment Savings Trust, whether that’s right or wrong. Advising these small firms is an awful lot of work for very little reward. It doesn’t help that consultancy charging has been scrapped and with austerity still biting for many firms, they just want to comply with the law and do the bare minimum.”