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14 Jul 2014

SMEs Should Start Getting Ready For Auto Enrolment

Small businesses still have a few years ahead to plan and implement changes to become compliant with the pension scheme automatic enrolment. Even though the deadline for the last small firms to join is 2017, experts believe that it is not too early to start planning ahead to make sure that all requirements are met.

Figures from The Pensions Regulator show that approximately 1.3 million small businesses, micro firms and new employers will have to enrol their employees in workplace pension schemes over the next four years. Small businesses that fail to do so will face financial penalties. Although many small business owners are intimidated by auto-enrolment, there are ways they can prepare for the transition, provided that they start well in advance, advises an article on the Guardian website.

First of all, owners should select a scheme. This requires some research and it is advisable that businesses consult a financial adviser to make their decision. For those who need further help, there is the option to offer a pension as part of the government-backed National Employment Savings Trust (NEST).

Timing is also an issue here, so experts recommend that businesses check with The Pensions Regulator for their deadline for compliance. It is advised that businesses prepare for their staging date well ahead of time, as the process can take six to 18 months to complete.

The next crucial step for getting ready for auto-enrolment is to plan the budget. Contributions from employers are not high at first, starting at 1% of basic pay until September 2017. But as of 2018, all business owners will be required to pay no less than 3% of basic pay for each employee into their pension pots. These contributions will be compensated by a lower National Insurance bill that employers will have to pay, the Guardian explained.

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