1 in 5 say auto-enrolment will force staff cuts
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One in five small businesses in the UK say they will be forced to cut staff or introduce pay freezes to combat the costs of auto-enrolment, according to the International Association of Book-keepers (IAB).
These stats come despite the fact that the mandatory employer contribution is currently a modest 1 per cent, and is due to increase to no more than 3 per cent by 2019.
Auto-enrolment is currently being rolled out to the nation's smallest businesses, with every single employer due to be under the regime by 2018.
More than 6 million people from over 100,000 companies have been enrolled onto a pension scheme since auto-enrolment was first introduced back in 2012, but smaller businesses feel introducing auto-enrolment will prove too costly.
As the IAB survey revealed, few businesses feel able to pass this additional cost on to their own customers, as existing profit margins are too small and they fear they will lose out on price to the competition.
Whilst some businesses are being forced to review staff remuneration packages and limit or even prohibit any pay increases for the foreseeable future, others are taking further steps. Redundancies are being considered, with a fifth planning to cut staff hours to avoid paying auto-enrolment or using contractors rather than temporary staff.
One respondent said: "So far, most of our clients are viewing this as part of their overall running costs and are examining ways of either gaining new business or adding value to existing business opportunities. It is making them look closely at remuneration packages for any new employees."
Another respondent summed up the desperate situation faced by many businesses, advising: "In most cases, it is a hit against the bottom line. There is no available resource to fund the additional time spent in preparing and conducting the processes."
The survey also revealed that a quarter of small business owners lack an understanding and knowledge of the auto-enrolment regulations and what is required of them as an employer. Another 25% are demonstrating apathy and are refusing to address the issue at hand.
Still unprepared? 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.
St. James's Place Wealth Management are one of the leading wealth
management organisations in the UK with a national network of advisers.
Using their experience, they offer businesses and individuals a wealth
management service, incorporating pension advice. The advice is
face-to-face and tailored to your business or personal objectives.
- Complimentary initial consultation
- Face-to-face advice
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- Advice is guaranteed by St. James's Place when recommending any products or services provided by the St. James's Place Group
Find out more here or phone Elliot Sanders's team on 01372 721616 / email Elliott.Sanders@sjpp.co.uk.