More SMEs than estimated must prepare for auto-enrolment
The Pensions Regulator (TPR) has wrongly estimated that 1.3m SMEs will need to prepare for auto-enrolment, as new figures show that in fact 1.8m SME employers will need to meet new pension duties over the next three years.
As a result TPR now estimates the summer of 2017 will see a peak of around 350,000 small and micro employers whose automatic enrolment duties will come into effect, compared to earlier predictions of a peak of around 220,000 in mid-2016. TPR's executive director of automatic enrolment Charles Counsell said the analysis "demonstrates that significant challenges still lie ahead".
TPR said the figures had changed because of more start-ups and fewer business closures.
He said: "As a result of more new employers starting up and fewer going out of business, the pensions sector will need to plan for larger numbers reaching the start of their duties. "
Steve Elliott, auto-enrolment specialist at Barnett Waddingham, said the 40% increase would add "substantial amount of pressure" to the industry.
He said: "The overall economy has picked up, there is a lot of optimism in the economy. I'm not surprised with this kind of change, the anticipated closures haven't happened. The reasons sound very valid when you look at the economy overall."
Morten Nilsson, CEO of NOW: Pensions, said: "The updated staging data from TPR is essential in helping us to plan for future volumes. There are only a handful of providers in the market that accept all employers and, as one of those providers, we need to make sure we have the right resources in place at the right time."
TPR's latest analysis also shows that by the end of March 2015 a total of 5.2m people were automatically enrolled and around 35,000 employers had completed their declaration of compliance between April 2014 and March 2015.
TPR research suggests that 8 in 10 SME employers have consulted an adviser to help them comply with their duties, or will do so. With more SMEs now seeking guidance, it is even more crucial to seek out an advisor now to ensure you fulfil your duties.
However, as previously revealed by a NOW Pensions survey, 28% of advisers believe there is too much administration involved with advising small businesses, while 25% are deterred by how much time it will take.
Not being able to find an advisor willing to take your business on will not be considered as a good enough excuse for failing to implement auto-enrolment on time.
Charles Counsell, The Pension Regulator's executive director for automatic enrolment said: "As we deal with smaller employers, we will see more who, despite our message to prepare early, leave it too late or do not comply at all.
"This type of non-compliance is not acceptable. We expect to see the number of times we need to use our powers increase."
If you fail to prepare in time, your business could face fines up to £10,000 per day for non-compliance, so don't delay in finding the right advisor for your business.
ActSmart can help
ActSmart can introduce you to Elliott Sanders of Copthorne Hundred Wealth Management, a Partner Practice of St. James's Place Wealth Management who can offer all businesses, no matter what size, advice on pension auto-enrolment.
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