A third of small employers staging in Q1 signed up six months or more ahead of their deadline, but experts have said this encouraging picture could change as micro-employers get set to auto-enrol this summer.
Concerns that a large number of smaller employers would fail to meet their auto-enrolment obligations were high last year, with many expecting widespread non-compliance across the SME sector.
Source: Now Pensions & The People's Pension
The Pensions Regulator has said it anticipates further increases in non-compliance issuances after a sharp hike to 1,139 notices in Q1, up from 163 in Q4 2014.
However, data from auto-enrolment providers Now Pensions and The People’s Pension have shown many small companies are exceeding expectations.
Of the companies that signed up to Now in Q1, nearly a third (32 per cent) did so six months or more ahead of their staging date.
Fewer than one in 10 employers (8 per cent) signed up after their staging deadline had passed.
By comparison, The People’s Pension saw more than four in 10 employers (41 per cent) completing their application six months or more ahead of schedule, while just 5 per cent missed the deadline.
But Darren Philp, director of policy and market engagement at The People’s Pension, said while the figures are encouraging, a high proportion of employers signing up during Q1 were still towards the larger end of the SME spectrum.
He said the process for employers with 30-250 workers is similar to larger ones, and this is reflected in these figures.
But Philp anticipated the trend will change as small and micro companies approach staging dates later this year and early in 2016.
“It’s a totally different game in the below 30 [employees]. The June test tranche will be very interesting,” he said.
However, Morten Nilsson, chief executive at Now Pensions, said it was hard to predict the bigger picture because some of its early joiners had been smaller companies.
“Many of these companies signing up early are being advised by their payroll manager or accountant, who are preparing earlier than the companies themselves might do,” said Nilsson.
“Next year there may be some companies who do not get any advice. It’s important to follow the trends closely, it’s not immediately obvious how they might change.”
Intermediary support
However, provider Standard Life said it continued to encounter SMEs leaving the process to the last minute.
A spokesperson said: “There are still SMEs who leave it until later, either due to lack of awareness... or assuming it won’t take much time.”
Research on SMEs and auto-enrolment by government-backed provider Nest this year has shown intermediary advisers will be critical to the final phasing-in stages, with nearly three-quarters (74 per cent) of SMEs planning to seek external help.
For example, more than half of respondents said they would ask their accountant for help with the process.
A spokesperson from Nest said in a statement: “Many will expect support from the outset and the majority [require] ongoing support.
“Small and micro employers are a key part of auto-enrolment and ensuring a new generation of savers can save confidently for their retirement. It’s important we work together to ensure they get the help they need.”
But its research showed only two-thirds (67 per cent) of accountants knew "a lot or a fair amount" about auto-enrolment, compared with more than nine in 10 independent financial advisers and payroll bureaux.
