The Federation of Small Businesses (FSB) says smaller and micro businesses in the UK are suffering from 'stage fright' - a phenomenon preventing them from complying with workplace pensions legislation.

It says despite fines of £500 per day for businesses with between 5 and 49 employees, until compliance with the legislation is proved, there is a low level of understanding about what pensions auto-enrolment means for them.

Under workplace pensions law, introduced in 2012, all UK businesses were allocated a staging date by which they must set up a workplace pension scheme.

Paul Baker, senior partner of IFS employee benefits at FSB, said it's essential smaller businesses comply:

"It is wrong to think no action is required if you only have one employee, or all your employees are opting out of having a Workplace Pension.There's no point shying away from Workplace Pensions and doing nothing."

Around 1.8 million smaller businesses need to set up a scheme between now and 2018 and it is calculated that fines levied on these businesses for non-compliance are likely to be in the region of £22million.

The FSB has set up a workplace pension scheme in conjunction with Legal & General, which it says is already helping its member businesses get over stage fright.

More than 4,500 FSB members have already taken advantage of the member-only scheme and a further 18,000 are currently going through the enrolment process for their individual staging dates.

Baker says smaller businesses should consider the scheme because not all workplace pension providers want to work with them.

He said: "This reduced the options available, which could be a critical factor when the last-minute scramble to set up a scheme occurs. It can take three or four months for some schemes to be up and running, so smaller businesses getting over their stage fright on a just-in-time basis need to beware of being stuck in a back-log, or not being offered a pension scheme at all."

First published 29.09.2016

Lindsay.sharman@wilmingtonplc.com