HR & Management
Auto-enrolment reaches small businesses
3 min read
01 June 2015
Regulations have just come into effect, stating that small businesses with under 30 employees have to enrol their staff in a company pension scheme.
Those covered by the new legislation include anyone over the age of 22 earning over £10,000 a year and people with a single employee such as a nanny.
Other smaller companies such as hairdressers and grocers will be incorporated into the scheme as it rolls out.
Employers will be given a deadline for getting the wheels in action – 14,000 will be affected by the first phase, starting from 1 June 2015.
It marks part of the government’s auto-enrolment scheme which was introduced in 2012, with over 28,000 businesses auto-enrolling just over 4.5m workers. The Pensions Regulator previously said that as the number of businesses reaching their staging date increases it expects to see a corresponding increase in the number of cases of non-compliance.
Real Business has previously covered what you need to know ahead of the scheme’s implementation and how to prepare for the process, following NEST research suggesting that while 91 per cent of small employers knew about the changes, only 18 per cent felt they completely understood what it meant for their business.
By the end of October 2017, as many as 1.3m small businesses will be signed up, with around 10m workers enrolled in a pension scheme.
Read more on auto-enrolment:
- Auto-enrolment is nearly upon us but SMEs still have time to prepare
- Auto-enrolment – What do you need to know?
- Auto-enrolment: Top five tips for small firms
The Federation of Small Businesses’ Liesl Smith said the process wouldn’t be easy. “Often they get bogged down in running the business and don’t necessarily have time to think about the actual human resource part of the business,” he said. “I think it’s a real challenge, particularly for smaller businesses.”
Those who neglect their duties could be fined £400. The Pensions Regulator has said it is working with 200 support organisations in order to make sure people receive proper advice as these changes take effect.
Anyone who took on an employee for the first time after 1 April 2012 will not have to pay pension contributions for another two years.
It’s not clear whether all local authorities will take on the responsibility – the Department of Work and Pensions said councils “should consider” the costs.