SMBs warned over pensions time bomb

Firms with 60 to 500 staff urged to act fast to avoid being penalised over new auto-enrolment legislation

SMBs should elevate the incoming changes to workplace pensions to the top of their priority list as 40,000 firms with 60 to 500 employees reach their auto-enrolment staging date this year.

That is the advice of KPMG, which said firms of that size that have yet to start planning for the introduction of auto-enrolment legislation could struggle to secure a supplier.

Under new legislation, all firms will have to contribute to workers' pensions with a one per cent contribution, rising to three per cent in 2018.

Some 40,000 SMBs will reach their auto-enrolment staging date this year, with non-compliance resulting in daily fines ranging from £50 to £10,000.

Andy Seed, pensions director for KPMG in the South East, said: "We have already heard anecdotal evidence from a number of suppliers who say that they won't consider putting themselves forward for business unless an SME has come to them at least three months ahead of their staging date.

"The inference is clear: if your business does not take planning seriously, it may struggle to find a pension supplier suitable for your business. If the arrangement is not set up in time, this could leave the company in breach of its statutory requirements, while staff will miss out on the intended benefits."

The staging dates for firms with 350 to 499 and 250 to 349 staff have already passed, on 1 January and 1 February respectively. The staging dates for firms with 160 to 249, 90 to 159 and 62 to 89 staff are on 1 April, 1 May and 1 July respectively, with deadlines set for 1 August, 1 October and 1 November for firms with 61, 60 and 59 staff.

"If they have not done so already, SMEs need to consider elevating auto-enrolment to top priority," Seed said.