The Association of Consulting Actuaries has called for micro employers to be excluded from automatic enrolment due to concerns about the administrative costs of complying with the new rules.
The UK’s biggest employers began auto-enrolling their staff into a pension scheme at the beginning of October. Firms with fewer than 50 employees have had their auto-enrolment staging date pushed back until after the general election in May 2015.
ACA chairman Andrew Vaughan says: “It is right that pension provision should be available to employees in even the smallest firms, but we do question whether the auto-enrolment rules are overly complex for businesses of this size.”
ACA chair of PR communications Steve Leake says: “We think the Government should look at excluding micro-employers from the legislation initially, because it will be difficult to police so many tiny firms and the whole system might start to creak as a result.
“Firms with fewer than five employees could be excluded from the legislation and participate on a voluntary basis instead.”
The ACA estimates around 750,000 micro-employers will eventually be caught by auto-enrolment regulations.
Its research suggests half of firms with fewer than 250 employees who already have a pension scheme in place will use this scheme for auto-enrolment. This follows concerns raised by the Pensions Institute that the reforms could lead to “unprecedented” misselling as a result of SMEs using existing, high charge schemes.
Wingate Financial Planning director Alistair Cunningham says: “I can see no reason why someone who works for a small company should not have access to a pension scheme.”