Businesses across Wales are sleepwalking into a crisis as new legislation to ensure every working person is signed up to a workplace pension scheme is being overlooked or ignored.

The biggest change to the UK pensions system in a generation is already underway and will affect every single business in the country.

The largest companies in Wales, with 800 or more employees, are already signed up to the new auto-enrolment pension programme, but the next tranche of businesses with workforce numbers between 250 and 799 have to be operating within the system from this month. SMEs of up to 249 workers are due to join the scheme in August next year.

Newport-based financial planning and pensions specialists Seer Green fear that the majority of businesses are continuing to turn a blind eye to the legislation.

The scheme has a financial impact on both employees, who will eventually have to contribute a minimum of four per cent of earnings each month into auto-enrolment, and employers who not only have to contribute a minimum of three per cent of the value of the employee’s qualifying earnings (including any bonuses, overtime payments etc), but have the headache of having to administer the pension scheme for the workforce.

And the penalties for any employer failing to take part in auto-enrolment will be severe, with daily fines of up to £10,000 a day and up to two years’ imprisonment for the owner of any business who continues to flout the new pension law.

Seer Green director and pensions expert, Siobhan Mail, said: “Despite having had 18 months to prepare for the onset of autoenrolment, the vast majority of businesses in Wales are sleepwalking into an on-rushing pensions crisis. They are just not geared up for the consequences of having to provide a pension for their entire workforce, let alone considered the implications to ensure they remain compliant with the law.

“Those implications are potentially really quite life-changing for businesses of all sizes.”