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SMEs urged to prepare for pension changes
Small and medium-sized enterprises (SMEs) are being urged to prepare for the forthcoming changes to the pension regime after new research found that almost a half do not have a pension scheme in place.
According to a new survey by Sage, 46% of the 1,500 small business owners questioned do not currently offer a company pension scheme for employees.
It also found that a third (33%) are unaware of their responsibility to provide a qualifying pension scheme as a result of the changes, while 54% of business owners mistakenly believe the Pensions Act will have no impact on their business.
From 2012 employers will be required to enrol staff automatically into a qualifying pension scheme and business owners must contribute a minimum of 3% of the member’s salary.
Where the employer does not provide such a scheme, employees must be enrolled into the new National Employment Savings Trust (Nest), a simple low-cost pension scheme that is being introduced by the government.
The changes will begin to take effect in October 2012, with the largest employers joining first and the smallest joining by September 2016 and contributions from staff and employers will also be phased in.
‘Business owners need to understand how and when this new reform will impact their firm,’ said Kathryn Shankland, product manager in Sage's Small Business division.
‘Even companies that already offer a pension scheme to their employees may still need to change processes, as there is a new minimum requirement that all pensions must adhere to’.
She continued: ‘If business owners are aware of the changes early enough and factor them into their plans and forecasts, it’s possible for firms to continue to grow their business and provide support for their employees’ futures.’