Small and medium sized enterprises which have yet to start planning for the introduction of pension auto enrolment legislation, may struggle to secure a supplier, according to KPMG. The professional services firm is advising SMEs to be fully prepared ahead of a number of key staging dates in 2014.

From 1 October, 2012, Government legislation paved the way for all employers to contribute to workers’ pensions. In the first instance, employers will have to make a minimum contribution of 1%, rising to 3% by 2018.

Around 40,000 SMEs are due to reach their auto enrolment staging date in 2014. Businesses employing between 60 and 500 people will be covered by the new regime by the end of this year.

Andy Seed, Pensions Director for KPMG in the South East said, “2014 is going to be a landmark year for a large number of companies. We’ve already heard anecdotal evidence from a number of suppliers who say that they won’t consider putting themselves forward for business unless an SME has come to them at least three months ahead of their staging date. The inference is clear – if your business does not take planning seriously it may struggle to find a pension supplier suitable for your business. If the arrangement is not set up in time this could leave the company in breach of its statutory requirements, while staff will miss out on the intended benefits.”

Those companies found to be in breach of statutory requirements face a range of sanctions with the Pensions Regulator having pledged to punish persistent and deliberate non-compliance. Financial fines include an initial fixed penalty notice of £400, escalating to additional daily fines in the range of £50 to £10,000 for continued failure to comply with a statutory notice.