According to the recent 2012 Smaller Firms Pension Survey conducted by the Association of Consulting Actuaries (ACA) only 28% of small firms have already budgeted for the increased costs to their businesses associated with the implementation of Auto Enrolment.
More worrying perhaps is that less than 20% were aware of the actual details, including their own obligations. Around ¾ of the firms that were aware, described the provisions as being Complex or even Very Complex, and it is easy to understand why. The new regulations are indeed unnecessarily complicated, especially for smaller businesses.
Although that’s true Auto Enrolment is not going to go away.
What do you need to do?
- Check you existing scheme - To start with you need to ensure that your existing pension scheme meets the new requirements, and it’s likely that in many cases this will not be so.
- If your scheme isn’t compliant then you may need to make changes, or even set up something new. This may be true even if you have a Stakeholder scheme set up under current rules. This needs to be addressed well before your individual 'Staging date', which is the date upon which the rules will take effect for your business. A recent survey suggests that it can take up to 18 months to transfer to a new scheme, taking into account the time taken for due diligence to ensure that the scheme is right.
- Once the Staging date arrives you will need to implement the complex rules, and Auto-Enrol all eligible staff immediately. Of course this will mean increasing the burden on your payroll too. But it doesn't stop there. In fact it’s going to be an ongoing headache every month of every year, as all staff will have to be constantly re-categorised with regards to eligibility, and of course the payroll costs will be ongoing.
Where to seek help
Realistically most business owners have neither the time, expertise or the inclination to deal with the implementation of auto enrolment. So most will need to seek professional help. For the majority of small businesses the simple answer is your trusted accountant. You may even be considering this as an option. But ensure your accountant has the right knowledge & expertise, or indeed the time available to offer this service.
Alternatively seek the help of a professional adviser, specialising in company benefits, someone that you know can be relied upon. The good news is that most Independent Financial Advisers (IFAs) are keen to build a close working relationship with their local accountant and their clients, to help ease the burden of Auto Enrolment.
A good IFA will often have a team of fully qualified Independent Financial Advisers who can offer you a complete solution, from the initial assessment of your existing provision, and collation of staff data, right through to the implementation post Staging day. Many will even provide software that integrates with most of the popular payroll software programs currently in use, making the ongoing administration as simple as possible.
If you decide to engage the services of an IFA don’t leave it too late to arrange an initial meeting to discuss how they can work with you and your accountant to make Auto Enrolment a much simpler & less scary change for the better. Remember they are going to be in great demand as Auto Enrolment gains pace!
Don't forget if you want to contact a financial adviser you can do so via the red button below.