- Pay rises could be impacted
- Both employers and employees are concerned
Small businesses are next to be affected by the automatic enrolment legislation. And, the onset of automatic enrolment into a workplace pension means that nearly one third (32%) of London's small businesses are fearful of not being able to offer their staff pay rises and bonuses. Alarmingly, 12% of the capital's companies employing less than 50 staff think that automatic enrolment could even put them out of business.
The findings come from independent research conducted by Enrolsme; a guided online automatic enrolment solution designed for small businesses.
With the recent announcement of the increase in the minimum wage , employers, especially smaller businesses, are finding themselves under mounting pressure to meet legislation, at a time when the sector could do with a helping hand.
As a result, 36% of employers in London claim they would need to increase the cost of their services to accommodate automatic enrolment; another 44% are still unsure.
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 20% claiming they won’t be able to recruit more staff. Complying with the legislation seems to be of real concern.
"However, even more concerning is the portion of small companies that believe automatic enrolment could see them going out of business all together. This was certainly not the goal of the legislation. These are tricky times for small businesses in London and more should be done to help support them.”
The survey also highlighted that nearly one third (32%) of London's employers still don't know what automatic enrolment is. And this rises to more than half (54%) of employees that still haven’t heard of automatic enrolment.
"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," added Mitten. "But given the fact that around 1.5 million businesses are yet to comply, I still find the lack of awareness at this current time a concern."
Other survey findings included:
• It is good to note that 95% of respondents state they will comply with the legislation.
• But, when it comes to the employees, 45% are either unsure, or they don't think their employer will even provide a workplace pension for them.
• 16% 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.
For and against automatic enrolment
• Two thirds (66%) of employees questioned stated they either aren't sure, or would opt out of the automatic enrolment pension scheme when offered to them, yet 84% of employees worry about having enough money in retirement.
• 64% of employers are still not sure whether automatic enrolment is a good thing for their employees.
• Conversely, 95% of employees are in favour of automatic enrolment.
Foster Denovo Enrolsme Limited is an appointed representative of Foster Denovo Limited, which is authorised and regulated by the Financial Conduct Authority.
Click here to download the press release.