Small Talk: This deadline will not go away. Every employer must start a pension scheme

The regulator has the power to fine businesses with more than five employers £500 for each day that they’re in breach of the rules

Small firms such as Whitechapel Bell Foundry must be ready for auto-enrolment (Getty)

The warnings are becoming shrill, but still far too many small businesses aren’t heeding the call to sort out their pension arrangements. The latest alert on auto-enrolment – the regulation that requires every employer in the country to put a pension scheme in place for staff, and to pay into it on their behalf – came from MPs on the Public Accounts Committee. They said last week that the “real test is still to come” for auto-enrolment, even though the roll-out of the reform began four years ago.

They’re right. Between now and March 2018, around 100,000 employers a month will reach their deadline for getting the scheme up and running. By that time, the rules will apply to everyone – including those employing a nanny or gardener, say.

But there is every indication that very large numbers of these employers will fail to comply with the requirements. Despite the publicity campaigns, there is either limited awareness among employers or complacency about what is required. And even those firms that are now taking auto-enrolment seriously are struggling to find good advice on the best way to comply.

The potential for an auto-enrolment crisis is clear from the official figures on the number of employers getting into trouble for non-compliance. Over the first three years of the scheme, when larger employers were required to join, the Pensions Regulator issued around 4,800 warning letters to those that hadn’t got the right arrangements in place on time – an average of around two a day. In the final three months of last year, it sent out a further 2,600 letters – the equivalent of 28 a day.

The regulator has the power to fine businesses with more than five employers £500 for each day that they’re in breach of the rules, or £50 a day for smaller employers. There is also the potential for auto-enrolment failures to antagonise staff, who will feel disgruntled about missing out.

According to the Federation of Small Businesses, there is little chance of compromise from ministers or regulators in this final stage of auto-enrolment implementation. Mike Cherry, the FSB’s policy director, warns that employers just have to get on with it.

“It is clear that many will struggle to get to grips with the legislation and implement it correctly, while large numbers of small firms are concerned about the cost to their business,” he warns. “We advise them to plan ahead and ensure they are prepared for their staging date, and seek advice and guidance from trusted parties; auto-enrolment is a legal requirement.”

It will be depressing if auto-enrolment turns into a small business scandal over the next two years. Broadly, the initiative has been a success, enabling several million people to make their own provision for retirement for the first time. The FSB’s research suggests that small firms think the new regime is good news for their staff and are keen to do the right thing.

But thinking and doing are two different things. Don’t be surprised if the anxious chatter over non-compliance gets louder and louder over the next two years.

Belief in new talent is an antidote to economic worries

The confidence of small and medium-sized enterprises (SMEs) in the economy and their own prospects fell sharply during the final three months of 2015, new research shows, amid concern about new tax charges, the global slowdown and the prospect of rising interest rates.

The accountancy firm Smith & Williamson said its Enterprise Index showed that 69 per cent of SMEs are hopeful the economy will improve over the next 12 months, down from 80 per cent at the end of the third quarter of last year; and 74 per cent are confident in their own prospects, down from 82 per cent. Nevertheless, 64 per cent intend to take on new employees

Negativity over the economy is being offset by the belief in a “growing talent pool”, said Guy Rigby, head of entrepreneurial services at Smith & Williamson. “With optimism surrounding recruitment normally reaching its peak at the start of the calendar year, it will be fascinating to see whether the Enterprise Index can maintain its strong reading.”

Cashless services must ensure that consumers are protected

Britain’s financial technology (fintech) sector continues to expand and the e-money industry may be its fastest-growing niche. New figures show that 78 firms have been granted authorisation from the Financial Conduct Authority (FCA) over the past two years to offer services including pre-paid cards, online payment accounts and mobile payment systems.

Regulatory consultant Bovill, which compiled the figures, said e-money technologies had taken off in the UK over the past year amid growing consumer acceptance of such tools. The fintech industry itself – particularly crowdfunding platforms – has also provided a very rapid increase in demand for e-money systems.

“UK consumers and businesses are increasingly comfortable with the idea of a cashless economy,” said Gillian Roche-Saunders, head of venture finance at Bovill. “But the regulatory background is complex and e-money providers need to ensure that systems, processes and controls are tight to ensure a high level of consumer protection; the FCA is not afraid to place these businesses under a microscope.”

‘We want people to feel that there’s an energy in the air’

James Layfield, Founder, Central Working

“The idea for Central Working came from one of my previous businesses. I was running my own airport lounge facility at JFK in New York, but every time I went into the city, I didn’t know where to work; I wondered why no one had opened something like an airport lounge in a town centre.

“Back in London, the more I thought about that, the more it made sense. Entrepreneurs not working out of an office often had to work in a depressing hotel or find a coffee shop.

“We opened our first venue in central London in 2011. From the start, we wanted to offer more than just a space. The idea was to create the right conditions for businesses to grow – the chance to work in a lovely environment but also to be part of a wider community. We’re so confident that people will make valuable business connections in our venues that we offer a refund if you don’t have that experience in the first 30 days of membership.

“We’ve since opened two more locations in London and we’re just opening a third, plus two venues in Liverpool and Manchester. They’re more than just workplaces – we want people to feel that there’s an energy in the air.

“We’re really proud that the Angry Birds team started out in one of our venues; they’ve told us we accelerated their growth.

“The model is simple: you can join Central Working and use all our venues for £99 a month and cancel any time. I really believe this is the future of the office.”