Auto-enrolment: how will it affect a business sale?

Over the next year, auto-enrolment (also known as workplace pensions) will move into its second phase. Compliance to this, and other regulatory requirements, form part of the due diligence process. If you’re selling a business, this is an area ripe for valuation ‘chipping’ so sellers need to ensure that they are fully compliant and have a solid rationale for pensions costs forecasts.

Three important things will happen over the next year.

  1. Employer contributions increase by 1% from April 2018.
  2. All employers, including new employers, will have reached their staging date by April 2018.
  3. Employers with 50-249 employees will reach their re-enrolment dates.

 

Fines for non-compliance are significant; the maximum fines start at £50 per day for companies with 1-4 employees and go up to £2,500 per day for those with 50-249 and as high as £10,000 for the largest employers. These are calculated until the company becomes compliant.

If selling a business is on your horizon, make sure you incorporate auto-enrolment compliance into your exit plan.  If you would like to find out more about preparing a business for sale please contact us or come along to one of our free Masterclasses

 

 

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