Making auto-enrolment work for small businesses

The first of June 2015 saw employers with less than 30 members of paid staff begin to auto-enrol employees onto workplace pension schemes. 

But recent research by NOW: Pensions  shows that there are still a significant number of small businesses that are either unaware or unprepared when it comes to auto-enrolment. Of the businesses who are yet to begin the process, 27% have not begun looking at potential pension providers. According to NOW: Pensions, this equates to around 350,000 businesses that are currently unprepared for their new legal obligations. 

The research identifies 2 clear underlying factors driving this: a lack of appreciation of the commitment required by auto-enrolment and a lack of clarity over the process in general. 52% of respondents did not think they would face any issues in finding a provider, while 34% admitted that they did not understand how their minimum contributions are calculated. 

Quite simply, avoiding auto-enrolment is not an option. As Morten Nilsson, CEO of NOW: Pensions, says: "Business owners need to wake up to the reality that if they don't get this sorted, they could face fines of up to £500 a day."

Breaking it down 

So, what are the top tips for those who don't quite fully understand the process or have so far failed to adequately prepare? 

The first step is one of perspective. While auto-enrolment may look like a mammoth task, it can actually be broken down into a number of smaller, simpler tasks. While the Pensions Regulator website has a detailed breakdown of exactly what is required of you, an organisation can begin its preparations by working through the following list: 

1. Find out your staging date from the Pensions Regulator

2. Work out your costs

3. Check your payroll records are complete and up to date

4. Choose a pension scheme

5. Enrol and inform eligible staff

6. Complete compliance documents.

Taken one at a time, the whole process of auto-enrolment can be handled pretty simply. Knowing your staging date is key to avoiding those hefty fines. 

Postponement is possible 

Another important piece of information that can get lost in the ether is the fact that your staging date is not necessarily set in stone. There is a process in place by which companies can push their staging date back to allow themselves more time to prepare.

Your staging date can be postponed by up to 3 months, but there are a few caveats to doing it. Firstly, you can only postpone from the day of your staging date, the first employment day of a staff member or the first day they become eligible.  Second, by postponing you are not actually changing your staging date, which remains the same.

To postpone, you need to contact the regulator up to 6 weeks after the date of your postponement. 

Auto-enrolment is also an opportunity 

As well as being a legal obligation, auto-enrolment also presents businesses with a range of possible benefits. If done properly and with company-wide communication at its core, the process can be a valuable tool for increasing employee engagement and retention. A recent study by Barclays Corporate & Employer Solutions found that 15% of businesses believed that auto-enrolment had helped with keeping workers engaged and stopping them from going elsewhere. 

Grant Hughes, head of SME at Barclays Corporate & Employer Solutions, notes that businesses are increasingly using workplace pensions as "the foundation on which to build a broader benefits package".

Auto-enrolment is not necessarily something to be begrudged or feared. If you need more time, then you have the option to postpone your staging date. If you need to play catch up, working your way through the steps above will help you to focus and prioritise your duties. The one thing you cannot do, however, is ignore the process completely.

We can help you comply with auto-enrolment with minimal disruption to your day-to-day activities. You can call us on 01375 383 888, fill in our contact form or email 


21 Lodge Lane
RM17 5RY

Tel: 01375 383888
Fax: 01375 391672