2 April 2015 09:00
Auto-enrolment could stunt small business growth
As the next tranche of businesses prepare to comply with auto-enrolment legislation, there are concerns that small firms could be adversely affected by the requirement to introduce workplace pensions.
The survey found that:
- 37% said pay rises or bonuses would be affected;
- 26% said they wouldn't be able to take on more staff;
- 19% said they wouldn't be able to invest in their business as they would have liked.
However, those businesses with the fewest employees (one to five staff) were even more concerned, with 43% of these micro businesses saying they are fearful they won’t be able to offer their staff pay rises and bonuses because of the burden of compliance.
In addition, 36% of these small business owners said they would need to increase the cost of their services to accommodate automatic enrolment. And one fifth (21%) of companies with one to five employees said that automatic enrolment could put them out of business.
Small business staff are worried too: the research showed that 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.
More than 17,000 companies with less than 50 employees are now approaching their auto-enrolment staging date.
Matthew Mitten, Director of Enrolsme, said:
“These are worrying trends. 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.”
The survey also highlighted that 31% of employers still don't know what automatic enrolment is, increasing to 37% in companies with between five and ten employees. Of the 69% of businesses that were aware of automatic enrolment, 70% didn't know when their staging date was.
“The Pensions Regulator 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 1.5 million 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.”