Companies 'Not Prepared For New Legislation'
A leading Pensions expert says Yorkshire businesses could be caught out by new laws after a survey revealed that most are under prepared for upcoming changes in legislation.
A survey of leading businesses and HR teams across Yorkshire by Irwin Mitchell Solicitors found that less than half (48%) of businesses in Yorkshire have started preparing for the 2012 auto enrolment pension regulations.
And almost a third (28%) said their organisation had so far taken no steps at all to prepare itself for the implementation of the new rules.
Nigel Bolton, a Partner in the Pensions team at law firm Irwin Mitchell, said: “It is worrying that many Yorkshire businesses are not prepared for the changes. Over the next five years the UK is set to undergo a groundbreaking reform of the pension system affecting every employer and employee across the country.
“Although many may feel that 2012 is a while away, these things take time to sort out. If a business fails to get its pension schemes in order they could face costly legal challenges from employees and large fines if they are not set up in time.
“What is interesting is that despite businesses feeling there is good quality financial advice available over half of those we asked don’t know or don’t think their current payroll systems can cope with the changes coming in.”
The Irwin Mitchell survey also revealed:
- Half of respondents said affordability was the main challenge for their business, closely followed by communicating the new rules to staff.
- Less than on third (31%) said that their organisation had budgeted for the financial impact of the new rules.
- Out of the 85% of businesses that said their business provided staff with a pension, less than half said the scheme complied with the new regulations.
- 40% of businesses disagreed with the idea that employees should be automatically enrolled into a company pension scheme.
- Only 13% of organisations had checked the employment contracts of their staff to see what their obligations to auto enrolment was.
From 2012 all employers will have to enrol their employees within three months of them starting employment. Under auto enrolment the largest employers will have to commence the process first with small employers being brought into the scheme between 2014 and 2016.
Along with the requirement of auto enrolment, it will become a requirement for compulsory contributions from both employers and employees (1 per cent for the employer until 2016 when it rises to 3 per cent). However employees may decide to opt out of their scheme and there is legislation in place to prevent companies from putting pressure on people to opt out.