A report released today reveals that 1 million small businesses are unprepared for the upcoming pensions revolution in the UK, and fewer than 1 in 5 are aware of the details of the initiative.
Under the new scheme, all businesses in the UK will be required to auto-enrol their employees onto a pension scheme. The contributions will be 8% of each employee’s ‘band earnings’, with a minimum of 3% contributed by the employer and 4% contributed by the employee (a further 1% will come from tax relief).
The scheme started rolling out for large businesses on October 1st. It will start in April 2014 for businesses with 1-250 employees. By October 2018, every employer will have to offer a pension scheme, with workers automatically signed up (but able to opt-out).
Today’s report from the Association of Consulting Actuaries (ACA) revealed that most small to medium sized businesses are “unprepared, unclear about what to do and unaware of the new duties placed upon them”. Only 28% of firms have started to budget for the changes, and 76% of those questioned said they thought the regime appears ‘complex’ or ‘very complex’.
The upcoming changes could have a big impact on the budgets of small businesses. The changes are expected to affect over a million small and medium sized businesses, over three-quarters of which have less than four employees.