Managers of UK small businesses have identified the new legal requirement to automatically enrol staff into a qualifying pension scheme as one of the biggest business challenges facing them in 2016.
Some 150 managers of small and medium-sized enterprises (SMEs) were asked by Exemplas what the biggest challenges are that they are likely to face in 2016, in the areas of business regulations, employment law, skills, business finance, digitisation, business taxation and business development.
The challenges most frequently raised within the research are finding employees with appropriate skills, lack of finance/funding and the time and costs of setting up pension schemes for employees, with the latter appearing to be of rising concern.
Out of those who identified a business challenge, one in five considered the time and costs associated with the auto-enrolment pension scheme to have potential for a big impact on them, with respondents even saying they feel bullied into it.
Specific comments include, 'I really do not know how I’m going to put money in the pot to pay for it.'
Another manager comments, 'We already have pensions here but now I’m being forced to give them to my staff by law; they are bullying you into it.'
Finding employees with appropriate skills, particularly to fill more junior roles, is also a major challenge for 2016 by nearly half (45 per cent) of the respondents who were able to identify one. Managers complain that particularly in specific industries 'in terms of technical skills...those with the skills are either retiring or will not leave their current company'.
Other issues facing SMEs in the New Year include lack of access to finance and funding (32 per cent), finding new business and entering new markets (32 per cent), challenges and costs of employee rights and restrictions (26 per cent), the cost of training and finding the appropriate trainers (24 per cent), and keeping up with industry specific regulations (21 per cent).
Jill Barnes, chief executive of Exemplas says, 'The coming year is likely to prove a challenge for SMEs in many ways, from the perceived skills shortage among young recruits, to the ability to diversify and enter new markets, and also keep up with ever-changing industry specific regulations.'
She adds that the government’s Comprehensive Spending Review has impacted funding provision for support and, with the closure of the Business Growth Service in particular, SMEs are struggling to access the support they need to grow.
'One of the biggest challenges identified was the impact that the legal requirement for an auto-enrolment pension scheme will have on their already stretched time and finances, Barnes says.
'In particular, smaller companies we surveyed commented that they simply do not know where the money will come from to fund this scheme.'
Further reading on auto-enrolment
See also: How to reduce your tax bill