SMEs say auto-enrolment will damage growth

Automatic enrolment (AE) is likely to prove challenging for the UK’s smallest businesses.

Some of the smallest companies claim that they will be unable to offer staff pay rises as a result and some fear they will go out of business, according to Enrolsme.

A poll of 200 employers and 50 charities in businesses employing 1-50 people with no pension in place  found that over a third (37%)  said pay rises or bonuses would  be affected as  result of the new requirements, and a quarter (26%) said they would not be able to take on more staff.

Matthew Mitten, director of Enrolsme, said: ‘These are worrying trends, given small businesses are the lifeblood of the economy. Employment in this sector may be affected with a third claiming they won’t be able to recruit more staff; and almost one fifth telling us they will have to reduce their investment plans.’

Mitten said: ‘The Pensions Regulator (TPR) does seem to be attempting to do more to raise the profile of automatic enrolment and workplace pensions through a media campaign.

‘But given the fact that around 1.5m businesses are yet to comply, I still find the lack of awareness at this current time a concern. Businesses really need to see the value of automatic enrolment.’

Of the 69% of businesses that were aware of automatic enrolment, 70% didn’t know when their staging date was, increasing to 79% for those employing one to five staff.

Overall, 11% of the businesses surveyed stated they would not plan their AE staging until the very last minute. Enrolsme calculates that with 1.5m businesses due to stage before the end of 2018, this would equate to approximately 165,000 companies.

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