Smaller and micro businesses around the UK are suffering from what The Federation of Small Businesses (FSB), has dubbed ‘stage fright’ – a phenomenon preventing many smaller businesses getting to grips with what they need to do to comply with Workplace Pensions legislation.
Under Workplace Pensions law, introduced in 2012, all UK businesses have been allocated a ‘staging date’ by which they must set up a Workplace Pension scheme, with the ‘stage’ into which they fall being dependent on their PAYE reference number.
Businesses setting up in coming years will have their staging date automatically triggered by their first PAYE registration.
Staging dates for businesses with more than 30 employees have already passed. Staging dates for businesses with less than 30 employees are set for 1 October 2016, 1 November 2016, 1 January 2017 and then monthly, on the first of the month, to 1 April 2017. Staging dates for new employers are from 1 May 2017.
Despite fines for businesses with 5-49 employees being £500 per day until compliance with the legislation is proved, there is an alarmingly low level of understanding amongst small and micro businesses about what pensions auto-enrolment means for them.
Around 1.8 million small businesses need to set up a scheme between now and 2018 and it is calculated that fines levied on these businesses, for non-compliance, are likely to be in the region of £22 million. Even large organisations have already fallen foul of law – and paid the price.
Additionally, of those aware action is needed, around half have asked for their payment enrolment date to be postponed. Others, are thought to be burying their heads in the sand, hoping the issue will go away. Some are simply unaware of the legislation, due to a lack of clarity in the government communications.
Managing director of IFS Employee Benefits at FSB, Paul Baker, says: “It is wrong to think no action is required if you only have one employee, or all your employees are opting out of having a Workplace Pension. Additionally, whilst you can defer your staging date for three months, you must advise the Pensions Regulator of this. You also need to complete a declaration of compliance.
“Although an accountant, consultant, bookkeeper, or actuary can fill in the declaration on the business’s behalf, the business owner has to check the paperwork is accurate and submitted on time. There’s no point shying away from Workplace Pensions and doing nothing. Our advice is to get over your stage fright quickly, understand how the legislation works and take action fast.”
To help FSB members do this, FSB has set up a Workplace Pension scheme in conjunction with Legal & General, which is already helping FSB member businesses get over stage fright and have their hand held throughout the process. Over 4,500 FSB members have already taken advantage of this member-only scheme and a further 18,000 are currently going through the enrolment process for their individual staging dates.
A 45-minute FSB webinar takes members through the legislation, explaining what they need to do. They can then book an appointment with a member of the auto-enrolment team and have a one-to-one session that sees a Workplace Pension scheme going live within around 30 minutes, rather than the four hours, or more, other schemes take. As everything is set up over the phone, a business’s details can be gained there and then, ensuring Legal and General has all the employee data it needs, which is inputted by the FSB team.
Once set up, the scheme can then be run in various ways – via the business’s own payroll software, through an accountant or bookkeeper, or by FSB providing ongoing support in every single pay period. The latter is the FSB ‘Premier Scheme’ and it already has 130 businesses on board, despite not having been officially launched yet.
Access to this simple-to-establish Workplace Pensions scheme is one of a number of tangible benefits available through FSB membership, which costs less than 0.44 pence per day for a micro-business and which, at its highest (for businesses with 249 employees), costs £3.95 per day.
Fees for the FSB Workplace Pension scheme start at £399 + VAT for businesses with up to 10 employees and it operates on the basis of a single annual management fee of 0.5 per cent, making it very competitive. It is also a high quality scheme that businesses can trust and one that will not disappear like some of the master trusts currently in the market.
As Baker explains, there is another reason to seriously consider it. He says: “Some Workplace Pensions providers will not wish to work with small and micro-businesses, reducing the options available, when a small business comes to search for one. This shrinkage in the provider market could be a critical factor when the anticipated last-minute scramble to set up a scheme occurs. It can take three or four months for some schemes to be up and running, so small businesses getting over their stage fright on a just-in-time basis need to beware of being stuck in a back-log, or not being offered a pension scheme at all.”
Further Workplace Pensions advice will shortly be delivered by FSB at three roadshows, for which registration is available to both members and non-members. These are being held in Leeds (4 October), Bristol (2 November) and Windsor (21 November). The full programme of each day can be found at www.fsb.org.uk
Any FSB member wishing to find out more about the FSB Workplace Pensions scheme can call the team on 01453 797507, or book on to one of their free webinars: fsbpensionservices.co.uk/webinars