Will your small employer leave you without a pension?

Fears that smaller employers will miss auto-enrolment deadline

Updated: 
A2CWRN Royalty free photograph of pension business headline in UK financial times pension; retirement; old; age; pensioner; prop

Auto-enrolment is marking another milestone this year, with workers in small and micro employers being given access to pensions possibly for the first time.

While the introduction of auto-enrolment was a slight tremor to large companies, and a largely insignificant cost, the impact on small businesses is more akin to an earthquake and there is concern that many aren't ready for the huge change in their systems.

The deadline is fast approaching but there could be some employees who will be left without a pension. If companies think delaying the implementation of pensions and contributing to them will save money, they're wrong. If a company passes the deadline it has to back-pay workers any contributions they would have been eligible for plus they could find themselves with a hefty fine for missing the deadline.
The government is taking pensions seriously, no matter what size the business.

However, there is another worry that isn't as easily remedied as back-paying what's owed: employers encouraging workers to opt out of auto-enrolment.

Under the auto-enrolment rules a worker has to opt-out of paying into the pension and this opts their employer out of paying any contributions too. What employers are definitely not allowed to do though is hassle you into opting out.

While employees are allowed to opt-out their employers certainly aren't supposed to make that decision and when employees are opted back in automatically every three years, it's their choice whether to stay or not, not their employers.

Opt-out fears

However, with small businesses operating on tighter margins than larger businesses, plus the fact that employees are more likely to have a direct link to their boss or owner of the business but little or no support from a HR department, there is a fear that auto-enrolment won't be as successful for small businesses.

If your employer is pressuring you to opt-out, you can whistleblow to The Pensions Regulator who will take the matter up for you, but understandably there is a risk that with fewer staff on the books it won't be hard to find out where that complaint has come from.

It remains to be seen whether the success of auto-enrolment that has been seen with larger employers can be replicated in smaller firms. The benefits of saving into a pension are finally sinking slowly into the public psyche and let's hope that the majority of small businesses see those benefits too.

Read more:

Why this year is the real test of auto-enrolment

Pensions: is auto-enrolment doomed to fail

Auto-enrolment success hangs on pension charge reform

Is the Do-It-Yourself Retirement Model Failing Us?