A survey of 160 small-business owners has shown that only 18% of them have started planning towards automatic pension enrolment – with more than one third (35%) having no intention of addressing the issue until six months out from the latest possible implementation date.

According to IRIS Software, who carried out the survey, the findings have caused concern among finance experts, who are urging small companies to give themselves plenty of time to prepare for auto-enrolment. Some pension providers are already turning their backs on firms that are leaving it too late. As well as setting out the many terms and conditions involved in the process and finalising the paperwork, substantial time is needed for companies to educate their staff on auto-enrolment and understand how it will affect operations.

Stressing that firms must give themselves at least 18 months to set up their auto-enrolment policies, IRIS SME Division chief executive Mark Paraskeva said: “It is really worrying that a large proportion of businesses are planning on leaving their automatic-enrolment preparation until the last minute. Many smaller businesses feel that automatic-enrolment does not apply to them – or will not apply to them for a few years.”

Across UK companies in general, though, the picture is much healthier. New government figures have revealed that fewer than one in 10 workers have withdrawn participation from their company pension scheme since large employers began to phase in auto-enrolment last October. Critics of auto-enrolment schemes feared that the process would cause a backlash from staff, with some observers predicting that up to 30% would opt out.

Large-scale employers had been required to automatically sign staff up either to their own pension programmes or separate plans – such as the National Employment Savings Trust’s scheme – in order to ensure that millions more workers actively save money for retirement. According to the Department for Work and Pensions, the highest proportion of employees to abstain were among the over-50 age group, as many in this demographic already have schemes set-up elsewhere.