All small businesses are now obligated to arrange auto-enrolment pension schemes for their employees.
But as this government plan is rolled out to the smallest of firms over the next two years, new research has suggested a large majority of pension providers could be making things difficult.
According to a study conducted by Defaqto for NOW: Pensions, around 77% of advisors predict that insurance providers won’t offer AE schemes to small and micro businesses – especially those with less than 30 employers.
Aside from this, 82% of advisors surveyed claimed providers have been cherry picking businesses, while 33% believe there isn’t enough choice for SME employers to be able to shop around and find the best deal.
Morten Nilsson, CEO at NOW: Pensions, thinks the biggest challenge is yet to come.
He said: “Owners of small firms will have little or no experience of pensions and will be fitting auto-enrolment in around their other day to day responsibilities. These firms are going to need considerable help both setting up their schemes and with ongoing administration.
“For many providers, the effort involved with administering these schemes won’t be worth it. Widespread cherry picking is already occurring but as smaller firms reach their staging dates, it’s likely that growing number of providers will close their doors altogether.”
As if the added administrative burden wasn’t enough for UK SMEs, the majority of insurance advisors (67%) expect to see an increasing number of pension providers starting to charge employers for auto-enrolment.
Essential Auto-Enrolment Information for Small Businesses
The auto-enrolment cut-off date for small businesses with less than 30 employees and for those companies who don’t pay their staff through the PAYE system is currently April 1st2017.
If your firm has more than 30 members of staff and you’re unsure when your staging date is, refer to The Pensions Regulator website for further information.