Martyn Roslyn is Managing Director of Roslyn’s accounting and has this to say about Auto Enrolment:
“Over the next 18 months all companies, whether it be one member of staff or 100 must provide auto enrolment. One hidden cost is in providing this facility; a company such as mine will need to pay in costs and employers contributions over £40,000 a year once the full percentage cost of the Auto Enrolment structure is live. And although the government currently advises that the maximum the employer may need to contribute is 3% of salary for now, we all know that once the fee is established the rate will rise and rise. So employers are giving each eligible employee a minimum of 1% pay-rise per annum. The cost to an average business with, say, five staff is over £10,000 per annum.
There is a common consensus with my colleagues in various payroll bureaus up and down the country that the up-front cost to individual businesses, in addition to the scheme costs, whether there is one member of eligible staff or 50, is between £350 and £600 per business.
This can’t be completed manually without huge staffing costs – it has to be by means of software, which is expensive. If, for example, we set up a new client for payroll services we would need to charge an up-front fee of around £450 to cover the additional work, costs and license through our software provider. In addition to this, we would need to increase our payroll serving fees by some 25% to cover the on-going cost of furnishing the pension provider with weekly or monthly information.”