Expert Financial Advice Can Help the Auto-Enrolment Process Run Smoothly for SME’s
From this year, over 45,000 SME's will fall under the new workplace pension duties set out by the Pensions Regulator, and will therefore be required to set-up and enrol their employees into a Qualifying Workplace Pension Scheme.
Introduced in October 2012, auto-enrolment has already had an effect on UK-based companies with a large PAYE size, this year will see small to medium sized companies take their turn in complying with auto-enrolment.
A recent study, carried out by the National Employment Savings Trust (NEST), has shown that SME's have a lack of confidence in dealing with auto-enrolment and feel that they will require further support in 2015 to correctly follow the new pension guidelines.
The study, which polled 300 SME's, found that 77% of employers lack confidence in preparing and complying with auto-enrolment, and as a result the employers plan to seek support from independent financial advisers, accountants or payroll providers from the outset.
It is however clear from past auto-enrolment phases that employers are not planning early enough for the number of tasks that need to be implemented ahead of their staging date. The Pensions Regulator has noticeably taken a more proactive role in recent months, having issued over 163 notices and the first three fixed financial penalties for non-compliance.
It would seem that this has acted as a warning as the report shows a surge in the number of SMEs citing that they plan to seek professional guidance to ensure they comply correctly.
The results recorded that 74% of the SME's planned to seek support from independent financial advisers (IFAs), accountants or payroll providers. It has been estimated that around 33,000 employers will rely on professional financial guidance in 2015. An increase that will see financial consultancies across the UK become inundated with requests for auto-enrolment support.
As one of Scotland's leading firms of independent financial advisors, Central Investment has already helped a significant number of clients successfully enrol their workforce into a pension scheme and we have already noted a rise in SMEs seeking our advice on how best to plan for and implement auto-enrolment.
It is crucial that companies seek advice as early as possible, well in advance of their staging date, as financial advisory firms will be managing a number of clients with the same staging date. Ideally, the first step that employers should take when seeking advice is to establish exactly what tasks the advisor will carry out and what their responsibilities will be during the auto-enrolment process.
In the past, many companies have relied solely on their payroll providers for assistance in the belief that their processing solutions will help meet all the required duties. In practice this is not usually the case and the roles of the payroll provider and financial advisor should be identified immediately.
Employers must check the eligibility of each employee every pay reference period and make the necessary adjustments to their contributions based on the outcome of the assessments. It is therefore vital that SME's communicate with their payroll provider ahead of their staging date to ensure that the auto-enrolment processes are implemented correctly.
Setting aside plenty of time for the initial and ongoing planning and administrative duties required, is essential for a successful enrolment. Employers should file up-to-date and comprehensive data about their workers, including date of birth, national insurance number, home phone number, email addresses and details of each worker's pay.
At Central Investment, we advise that all employers preparing to comply with auto-enrolment, including those with existing schemes, should prepare a project management plan which includes key task milestones to ensure projection completion prior to their Staging Date.
Our team of experienced financial advisors can offer expert guidance to support data management and record keeping before and after a client's staging date. We can help with every step of auto-enrolment to offer a full solution, including payroll innovations and internal communications to all employees within the company.
From this year, over 45,000 SME's will fall under the new workplace pension duties set out by the Pensions Regulator, and will therefore be required to set-up and enrol their employees into a Qualifying Workplace Pension Scheme.
Central Investment Services (Scotland) Ltd is Authorised and Regulated by the Financial Conduct Authority. Registered in Scotland No SCO54118. Registered Address: 33 Albyn Place, Aberdeen AB10 1YL

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