Personal Pension  

Small businesses ‘gambling’ with auto-enrolment

The chief executive of Now: Pensions said too many small and medium-sized business owners assumed their current provider would supply them with an auto-enrolment pension.

Citing research by the firm of 450 SME owners – which revealed that 44 per cent had not given any thought as to how they will find a pension scheme to comply with the new auto-enrolment legislation – Mr Nilsson said: “Companies planning to rely on their existing provider are taking a gamble.

“The reality is that not all pension providers are happy to accept all companies and all employers on equal terms. The upshot of this is that day after day, we hear of firms that have been let down at the last minute.”

The provider’s research revealed that 22 per cent intended to use their existing pension provider for auto-enrolment. Some 14 per cent intended to get help from their accountant, while 5 per cent said they would consult an IFA.

Meanwhile, just 4 per cent of business owners said they were going to research the market themselves, while only 2 per cent had already made a decision and secured a scheme ahead of their auto-enrolment staging date.

Mr Nilsson added: “Selecting the right pension scheme for auto-enrolment is important and has long-term implications for employees.

“Taking time to review the options that are available in the market is sensible and planning ahead will help to keep stress levels to a minimum.”

A spokesman at The Pensions Regulator said: “Thousands of medium-sized employers due to stage before August should now have in place a suitable pension provider and payroll software.

“If they have not, they need to act now to avoid the risk of failing to meet their deadline to comply and the possibility of enforcement action, including fines.”

Employers can find out their staging date using a tool on The Pensions Regulator’s website.

Adviser view

Carl Lamb, managing director of Norwich-based Almary Green, said: “It is a complete disgrace that the vast majority of life companies are refusing to even quote for cases involving fewer than 20 employees. The auto-enrolment process is very onerous for small businesses to administer and even when employers try and start the process early, many life companies refuse to provide quotations until the business has entered its final 12-month period before a scheme needs to be activated. Life companies should be obliged by law to offer schemes to companies of any size.”