42% of small businesses plan to turn to their accountant for auto-enrolment

Our research highlights that complying with automatic enrolment legislation could stunt small business growth

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Small businesses are next to be affected by the automatic enrolment legislation. More than 17,000 companies are on the cusp of staging, and - unsurprisingly – a massive 42% plan to turn to either their accountant or bookkeeper for guidance when it comes to getting their staff enrolled into a workplace pension. This figure rises to 59% in businesses with 1-5 employees.  

The findings come from independent research  conducted by Enrolsme; a guided online automatic enrolment solution designed for small businesses.  

Matthew Mitten, Director of Enrolsme, said: "2015 will be a real crunch point not only for businesses, but for their accountants too. Accountants should be putting automatic enrolment on the agenda for every client meeting this year. As professionals, they are generally good planners; whereas many of their clients are unlikely to be so efficient.

“11% of small businesses said they would not plan for automatic enrolment and would leave it until the last minute. So, accountants should be drawing up short lists of those they need to talk to and to alert about their automatic enrolment responsibilities and deadlines. Accountants we talk to are doing more than sending letters. They are picking up the phone and speaking to their clients."

In addition, 27% of those small businesses surveyed think their accountant will be primarily responsible for helping them to set up their pension. This rises to almost 40% of businesses with less than 5 employees.

Matt Mitten states “If accountants haven’t sourced a solution to their clients’ auto-enrolment needs yet, then I’d argue they need to prioritise this sooner rather than later.  Otherwise, they may find themselves inundated with worried clients who don’t know what to do and where to turn”.

The surveys also highlighted that, 43% of those employing 1-5 staff are fearful of not being able to offer their staff pay rises and bonuses. Furthermore, 72% of employees who work in companies with less than 50 staff are concerned that their future pay rises may be affected as a result of putting in place a workplace pension.

Alarmingly, 21% of companies with 1 to 5 employees think that automatic enrolment could even put them out of business.  

"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,” says Matthew.  

Other survey findings included:

Business
•    The survey asked employers (1 to 50 staff) to advise if they thought auto-enrolment would negatively affect their business.  They could choose as many, or as few as they liked:    
o    37% said pay rises or bonuses would  be affected
o    26% said they won’t be able to take on more staff
o    19% said they wouldn’t be able to invest in their business as they would have liked

Complying
•    It is good to note that 97% of respondents state they will comply with the legislation. Whilst only 3% advise they won't comply. Whilst this seems a relatively low figure, it equates to circa. 45,000 small businesses in total.
•    But, when it comes to the employees, 48% are either unsure, or they don't think their employer will even provide a workplace pension for them.

Planning
•    11% of the businesses surveyed stated they wouldn't plan and that they would leave staging until the very last minute - just before they had to, in order to avoid a fine. Given 1.5m businesses will stage before the end of 2018, this would equate to approximately 165,000 companies leaving it to the last minute.

For and against automatic enrolment
•    13% of employees questioned stated they would opt out of the automatic enrolment pension scheme when offered to them, yet 86% of employees worry about having enough money in retirement.
•    Nearly two thirds (65%) of employers are still not sure whether or not it is a good thing for their employees.
•    Conversely, 90% of employees are in favour of automatic enrolment.

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