More SMEs to be affected by auto-enrolment
30 September, 2015
The Pensions Regulator has published data which reveals that more businesses will have to implement a pension auto-enrolment scheme than initially expected.
Almost 1.8 million smaller businesses will have to meet the requirement to provide pensions for their employees over the course of the next three years, compared to the previous estimate of 1.3 million.
This means that almost half a million more firms are set to be affected and will face higher employment bills as a result of complying with the new legislation.
As part of the new regulations, employers must contribute at least one per cent of eligible employees’ qualifying earnings until 30th September 2017.
Between 1st October 2017 and 30th September 2018 employers must contribute two per cent, and then three per cent the year after, though more can be contributed if desired.
Employees will also be required to make contributions from their salaries, to be combined with the employer’s contribution.
In addition to the financial implications that setting up auto-enrolment will have for businesses, further costs could be incurred if they fail to comply with their official auto-enrolment obligations.
Fixed penalty fines will be served to any company that does not have a pension scheme set up in time, with amounts ranging from £50 to £2,500 a day.
For more information on how changes in legislation can affect tax requirements for employers, and how to implement an auto-enrolment scheme that is suitable for your business, please contact us.