Fifth of Small Business Say Pension Reforms Force Staff Cuts
New research suggests that 1 in 5 small businesses in the UK will be forced to cut their employee numbers to help manage automatic enrolment.
The research, conducted by the International Association of Book-keepers (IAB), concludes that the additional financial responsibilities brought forward by the Workplace Pension Reforms though auto enrolment has seen many small businesses struggle to maintain profit margins.
To Cut or Not to Cut?
Businesses feel that staff cuts or reviews of salaries and benefits are the only option, as passing the additional costs onto customers through increases prices could result in fewer customers. In many cases now, businesses are being forced to either cut staffing levels, or increase their prices in order to maintain pension contribution levels.
Malcolm Trotter, chief executive of the IAB, said: “Whilst the government, through its agencies, is making some efforts to inform businesses about these new obligations, it would appear that many micro and small businesses feel that it isn’t doing enough to support them in either a financial or educational capacity, particularly as many of them are still fighting to find their footing after the recent recession.
“Many IAB members are reporting significant delays in their clients’ preparations for auto-enrolment and we believe that one of the main reasons for this is that some business owners simply have no idea how they will be able to meet both setup and running costs. Our members and the IAB itself are working hard to come alongside these firms to provide the supplementary support they clearly need.
“The IAB works very closely with The Pensions Regulator to help our members support their clients with auto-enrolment and recently, The Pensions Regulator has simplified its website to ensure it is specifically aimed at small and micro businesses. It has introduced a new duties checker tool to allow businesses to check exactly what they need to do and when to do it, as well as information to help businesses understand the costs involved.”
The Effect on Payroll
We named the pension reforms in our recent free guide, Top 5 Payroll Issues of 2016. In the guide we put together the top 5 issues which we predict will affect payroll and businesses the most during the course of 2016. Additionally, the guide also covers ways your business can prepare for the changes to help you manage each issue individually.
Top 5 Payroll Issues of 2016 is available for free download using the blue buttons at the top and bottom of this blog.