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SMEs - Prepare for automatic enrolment now

by Sable International | Sep 02, 2015
  • Recently introduced pension rules in the UK have made automatic enrolment compulsory for SMEs. These rules have changed the pension landscape and if you are the owner of an SME, it is essential that you start preparing for auto enrolment now.

    A recent Quickbooks survey of UK SME owners showed that auto enrolment compliance is still not generally well understood. Of those surveyed, 40% did not know how much auto enrolment would cost (or thought that it would cost nothing to implement), 20% thought that they would have to reduce employee benefits and about 30% figured they would have to cap salaries and/or bonuses. 

    Ultimately, all these respondents had misconceptions and this is why:


    Firstly, auto enrolment is more about compliance and less about pensions and payroll. Most fines handed out by the regulator have been based on compliance issues. Fines are frequently given for influencing opt-in and opt-out decisions and employee communication. 

    Auto enrolment is thus not an extension of the payroll function and SMEs viewing this as such would be making a potentially expensive mistake.


    Achieving compliance is going to be a big man-hour spend for small businesses. Despite its name, there is nothing automatic about auto enrolment. The Centre of Economics and Business Research has estimated that the implementation and management of auto-enrolment for a typical firm with one to four employees will cost an average of £11,300 in man-hours. So we are advising our clients to give themselves at least six months to get fully prepared.

    Advice on auto enrolment is in short supply

    There are very few IFAs in the UK advising on auto enrolment. Most big private pension providers have minimums in place and won’t accept small premium business, or will do so at a cost that is prohibitive to the employer. 

    Low-cost master trust pension providers are simply not equipped to guide an SME through the scheme selection and set up process. In addition to this, most of the risks to the employer (in terms of fines from the regulator) lie in the ongoing management of employee communication and new starter process.

    If you own an SME and you have not yet prepared for auto enrolment, we can help you ensure that you are fully compliant. If you have any questions about auto enrolment give our team a call on  +44 (0) 20 7759 7519  or send us an email.

    We are a professional services company that specialises in cross-border financial and immigration advice and solutions.

    Our teams in the UK, South Africa and Australia can ensure that when you decide to move overseas, invest offshore or expand your business internationally, you’ll do so with the backing of experienced local experts.

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    Sable International is a trading name of 1st Contact Money Limited (company number 07070528), registered in England and Wales. We are authorised and regulated by the Financial Conduct Authority in the UK (FCA no. 517570), the Financial Services Conduct Authority in South Africa (1st Contact Money [PTY] Ltd - FSP no. 41900) and hold an Australian Financial Services License issued by ASIC to deal in foreign exchange (1st Contact Group - AFS License number 335 126).

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