Businesses unprepared for new pension rules

Fewer than one in ten SMEs has made preparations for dramatic new pension rules.

A new survey from Clifton Wealth has found that some 90 per cent of small business owners have failed to start preparing for the swingeing changes, despite the looming deadline. Just as worryingly, half of those surveyed said they did not understand auto-enrolment.

The survey also found that more than 80 per cent of respondents had no idea what auto-enrolment would cost them. Recent figures from the Centre for Economics and Business Research suggested that the average cost to small businesses could reach £8,900.

Businesses with fewer than 50 employees could be forced to begin auto-enrolment as early as April 2015. The changes, which require that every employee earning above a certain threshold be automatically enrolled in a workplace pension scheme, will have a dramatic impact on many of the UK’s smaller firms.

Businesses will also be required to make contributions to employees’ pension schemes, beginning at 1 per cent and rising to 3 per cent.

Read more about auto-enrolment for small businesses.