A recent survey has found that even though auto-enrolment pensions will be mandatory for all British businesses in 2018, a staggering 35% of small business owners still don’t know what it is, and those who do are worried about the extra expense and how it will affect hiring new employees.

Auto-enrolment forces all UK businesses to contribute to their staff pensions and all employees will be enrolled in the scheme unless they opt out. Not complying with the legislation can lead to fines and even prison for business owners.

Many businesses have already signed up for auto-enrolment as the size of company and the number of employees dictated when they had to sign up by, but the deadline for all businesses to sign up is February 2018.

The survey, commissioned by local services marketplace website Bidvine.com asked small business owners an array of questions about auto-enrolment pensions. The survey asked:

Has your business already complied with pension auto-enrolment? 35% of participants stated that they didn’t know what it was, while 33% said that they had not set up systems yet.

Over 40% of respondents admitted that the new legislation which forces businesses to contribute to employee’s pensions could affect their ability to hire more staff in the future.

Keen to know how the government was pushing the legislation, Bidvine asked participants if they thought that there had been enough information and support around auto-enrolment. 65% answered that there had not been enough information while the rest (35%) said yes.

There also seemed to be some confusion as to the deadline for auto-enrolment as 66% said that they did not know when the legislation started, while 31% though that auto-enrolment should be optional and not compulsory.

Bidvine.com co-founder, Russ Morgan said,

“We wanted to get insight into what small businesses think about auto-enrolment seeing as it’s going to affect every employer in the UK. We were astonished to discover that many didn’t even know what it is! It might seem like a way off yet, but as you will see in the guide we’ve created with the auto-enrolment bureau, business owners should start the process 6 months in advance in order to be compliant.

“We were pleased to see that most business owners agree that auto-enrolment is a good idea, however it is slightly worrying that 43% said the extra cost will affect hiring new employees – something the government may have to consider in the future as it may affect employment.”