With 500,000 small firms due to introduce workplace pensions, Now: Pensions has released that top five myths surrounding auto-enrolment.

The company says misapprehensions around auto-enrolment are common and says its "myth-busting" will help employers to navigate the changes.

Now: Pensions CEO Morten Nilsson said: "When it comes to auto-enrolment, there's a lot to take in and it's easy to get the wrong end of the stick."

The first myth "postponement means I don't have to do anything" is put to rest by the fact that in fact, companies are only postponing assessing and enrolling staff and the staging date remains the same.

Nilsson said: "As an employer you can choose to postpone as many or as few employees as you like but there are a few things to consider such as the length of the postponement and the fact people can decide to opt into the pension during the postponement, so you need to be prepared."

"Postponement can be useful but it should be used carefully and for the right reasons."

Myth number two – that all pension providers are open for auto-enrolment business – is also de-bunked.

"Choosing a scheme is a crucial step, but not all pension providers will welcome every employer," Nilsson said.

The third myth – that missing a staging date means being unable to find a pension provider – is also proven inaccurate, as there are businesses that will accept businesses passed their staging date. 7

Nilsson warns however that this should be avoided or companies could receive heavy fines.

The third and fourth myths – that contributions are on every pound of earnings, and, that minimum contributions are enough for comfortable retirement – are also disputed.

For the 2015 / 2016 tax year, the first GBP 5,824 of earnings are not counted in the auto enrolment calculation nor are any earnings over GBP 42,385.

However, employers can contribute on every pound of their employees' earnings if they would like to provide a more generous pension, but will need to ask their pension provider to set up their scheme on that basis.

Nilsson said: "It's easy to assume that if you and your employees are putting money into a workplace pension scheme at the level mandated by the government, your staff will be able to retire comfortably, but you'd be mistaken."

He added: "If in doubt, seek some help from an expert because getting it wrong can result in some fairly steep penalties."

First published 24.02.2016

Lindsay.sharman@wilmingtonplc.com