With over 32,000 SMEs with employee numbers ranging from 50 to 249 due to enrol in workplace pensions in this financial year alone, companies are being warned not to leave the process too late or they may risk finding themselves at the back of a very long queue.
With 1.6m SMEs required to enrol into pension schemes over the next four years, Lighthouse Group has recommended that employers start preparing for auto-enrolment at least 12 if not 18 months before their due staging date.
CEO Malcolm Streatfield said: Many businesses are not leaving themselves enough time to prepare, even though they are aware of their auto-enrolment timelines. A common mistake by employers is the assumption that their existing accountants or payroll provider will provide the necessary advice or support and a ready made solution, which only serves to lull employers into a false sense of security.
Those SMEs who want to exercise their option for postponements will still face obligations which they have to fulfil before their staging date. The common misconception is that businesses are able to postpone and not think about enrolling until a later time.
Even larger employers have been victims of the auto-enrolment process; from payroll systems that have not been able to deal with the demand within the allotted time, to the proliferation of dirty data challenges. The problems that have arisen from the demands of auto-enrolment have even caused some employers to switch between suppliers half-way through the process, or in some cases after they have finished the enrolling, with many businesses regretting their original choice of supplier and looking to change.
Many have simply not factored in the length of time it takes to gather the correct personal data of employees and get their payroll systems into shape, which is a mandatory requirement to begin the process”, Malcolm added. “Engage early! Starting early will mitigate the risks of making mistakes and then getting fined as a result, while also helping with the budgeting process and avoiding any market capacity problems. Too many businesses have left the process too late and risk making costly mistakes, by utilising the wrong solution.